Unclaimed dividends have become a major challenge in Nigeria’s capital market, frustrating shareholders and raising questions about systemic inefficiencies. Despite efforts by the Securities and Exchange Commission (SEC) to modernize processes and introduce reforms like the electronic dividend (e-dividend) system, the problem continues to persist, leaving many investors unable to claim their rightful earnings. As of now, the unclaimed dividend backlog has reached an alarming N215 billion, underscoring the urgency of addressing this issue.
The Growing Crisis
The unclaimed dividends crisis in Nigeria’s capital market is not a new issue but one that has deepened over the years. In 1999, the total amount of unclaimed dividends stood at N2.09 billion, but by 2015, the figure had risen to N90 billion. This upward trend has continued, with unclaimed dividends growing steadily in subsequent years. By 2019, the figure had surged to N158.44 billion. In 2020, it reached N168 billion, followed by N177 billion in 2021, and an estimated N190 billion in 2023. Currently, the unclaimed dividends figure stands at a staggering N215 billion. This sharp increase highlights ongoing systemic issues, including outdated processes, lapses in record-keeping, and inefficient mechanisms for managing shareholder dividends.
Background to the Crisis
The e-dividend system, introduced by the SEC to facilitate faster and more transparent dividend payments, was designed to address many of the challenges associated with unclaimed dividends. While this electronic system has been a step in the right direction, it has not fully resolved the problem. One key reason is the inefficiency of registrars, the entities responsible for maintaining shareholder records and processing dividend payments. Registrars have been widely criticized for poor record-keeping and delays in processing claims, which have contributed significantly to the unclaimed dividend backlog.
Another contributing factor is the rising number of deceased shareholders whose estates remain unclaimed due to a lack of awareness among their heirs or challenges in tracking investments. Many families are unaware of the investments made by their deceased relatives, further compounding the issue.
The Role of Registrars and Inefficiencies
Registrars play a central role in the management of shareholder records, but their inefficiencies have been a major driver of the unclaimed dividends crisis. Shareholders often face difficulties in claiming their dividends due to errors in record-keeping, such as the opening of multiple accounts for the same investor, despite identical personal details. This lack of coordination and accountability among registrars has left many dividends unclaimed, causing frustration for investors.
Mathew Akinlade, the President of the Noble Shareholders’ Solidarity Association, shared his personal experience with registrars and called for greater accountability. He recounted how multiple accounts were opened for him under the same name, despite providing consistent details. “Such accounts should be automatically consolidated,” Akinlade emphasized, underscoring the importance of registrars taking responsibility for improving record-keeping practices.
Impact of Deceased Shareholders and Family Challenges
The challenges associated with deceased shareholders’ estates have emerged as a significant factor in the unclaimed dividends crisis. Bisi Bakare, the National Coordinator of the Pragmatic Shareholders Association of Nigeria, pointed out that many unclaimed dividends stem from deceased investors who did not leave behind clear instructions or wills regarding their investments. This has created a situation where their families are unable to access the dividends.
Bakare also highlighted the complexities arising from the privatisation era, where shares were purchased under different names, adding another layer of difficulty for heirs trying to locate and claim these investments.
The Struggles of Grassroots Investors
For minority shareholders, the challenges are often more pronounced. Ariyo Olugbosun, a shareholder, recounted his difficulties with registrars, particularly regarding the e-mandate process, which failed because his signature record was reportedly missing from their archives. “These experiences have negatively impacted my trust in the market,” Olugbosun stated, noting that the lack of coordination and accountability among registrars is a major obstacle. He also emphasized the difficulties faced by families managing the estates of deceased shareholders, where the costs and complexities involved can prevent heirs from claiming dividends.
Calls for Legislative Reforms and Public Awareness
The unclaimed dividends crisis has prompted calls for legislative reforms to address the root causes of the problem. Boniface Okezie, the National Coordinator of the Progressive Shareholders Association of Nigeria, argued that the statute of limitations on unclaimed dividends, as defined by the Companies and Allied Matters Act, needs to be reviewed. According to Okezie, the current law stipulates that unclaimed dividends must revert to the companies after 12 years, but this provision is often ignored. He called for an amendment to this section of the law, emphasizing the need for greater transparency and fairness in handling unclaimed funds.
Okezie also advocated for increased public awareness campaigns, particularly targeting grassroots investors who may not be aware of the e-dividend system or how to claim their dividends. “The SEC must embark on enlightenment programmes with other stakeholders,” he stressed, highlighting the need for more widespread knowledge about the dividend claims process.
E-Dividend Portal and Technological Solutions
In response to the unclaimed dividend crisis, the SEC has taken steps to modernize the system further by enhancing the e-dividend portal. The revamped platform offers a more user-friendly interface and improved security features, enabling investors to better track their dividends and claims. The SEC has also been working on resolving legacy identity management issues through various committees and initiatives aimed at consolidating shareholder data and improving the accuracy of records.
Despite these advancements, the SEC recognizes that further reforms are needed to address systemic issues, such as inefficient registrars and the lack of awareness among investors, particularly those in rural areas. A more comprehensive, multi-pronged approach is necessary to resolve the crisis.
Looking Ahead: The Path to Resolution
As Nigeria continues to grapple with the unclaimed dividend crisis, stakeholders are calling for urgent action to reform the system. Improved record-keeping, stricter oversight of registrars, and better public awareness campaigns are essential to addressing the root causes of the problem. The SEC’s ongoing efforts to modernize the system are a step in the right direction, but significant challenges remain. Until these reforms are fully implemented, shareholders, both living and deceased, will continue to face difficulties in accessing their rightful dividends.
With the N215 billion backlog, the stakes are high, and the pressure is mounting for both the government and the SEC to take decisive action to resolve this longstanding issue. Only time will tell if these efforts will be enough to restore investor confidence and bring an end to the unclaimed dividends crisis.
