NGX strategies to reduce N180 billion unclaimed dividends

Efforts by the Securities and Exchange Commission (SEC) to tackle rising unclaimed dividends in the nation’s capital market have continued to hit the wall, necessitating the Nigerian Exchange Limited (NGX) to deploy measures to check the trend.

Indeed, the figure had risen to N180 billion in December 2021 from N170 billion in 2020 and N158.4 billion recorded in 2019. The apex capital market regulator has put several measures in place to eradicate the difficulties encountered by retail investors in claiming their dividends through their savings accounts, especially the introduction of the e-Dividend Management Mandate System (e-DMMS).

The initiative, which was rolled out in 2015 is an electronic dividend payment platform that enables an investor’s account to be credited after 24 hours the dividend is paid.

Also, SEC had recently inaugurated the e- dividend champions for banks and registrars at its Lagos Zonal office. The champions would have the responsibility of forwarding all shareholders’ complaints on registration to the Nigerian Interbank Settlement System (NIBSS) to give clarifications on the issues within three days.

But at the virtual Nigerian Exchange Limited (NGX) Retail Investor Webinar with the theme, ‘How to Process Unclaimed Dividends’, organised in collaboration with Futureview Asset Management Limited at the weekend, the figure was put at N180 billion, representing five per cent of the entire dividends declared in 2021.

Chief Executive Officer (CEO) of NGX, Temi Popoola, while speaking at the webinar, argued that the issue of unclaimed dividends was not peculiar to Nigeria alone, noting that peer markets like South Africa ($68.26m) also grappled with unclaimed dividends.

According to Popoola, the webinar was put together to deepen the knowledge and capacity of retail investors in processing unclaimed dividends.

He assured that the SEC would continue to work assiduously with stakeholders to reduce the cases of unclaimed dividends in the market to the barest minimum.

“Recently, the commission created an e-dividend portal to reduce the high incidence of unclaimed dividends.

“The e-dividend portal also enables proceeds from secondary market transactions to be credited to their preferred Bank Account (Direct Cash Settlement),” he said. He urged investors to register on their portal to ascertain outstanding dividends and the figure of the value of dividends they are yet to claim.

Group Managing Director, Futureview Group, Elizabeth Ebi, stressed the need for investors to use the more formal route of fund managers for their investments.

According to her, this could help them reduce complexity and generate better returns in the long run which they may not be able to achieve on their own.

Also speaking, the CEO of the company, Ugochi Nnodi, said investors could eliminate the hurdles of dividend recovery by using a stockbroker; engaging a professional asset manager, or subscribing to equity mutual funds.

She linked rising unclaimed dividend figures to a lack of awareness, forgotten investments, multiple subscriptions, and inaccurate and outdated information/identity management.

Divisional head, Capital Markets, NGX, Jude Chiemeka, assured that the NGX was poised utilising technology to optimise intermediaries and increase access to the market for retail investors.

To this end, he said NGX has established a digital gateway to democratise access to the market, reduce friction and drive retail participation in the capital market.