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Multinationals: Dollar shortage raises fear of takeover by foreigners


CBN urged to grant Forex cover for unclaimed dividend repatriation
• Conversion of dividend to shares will push us away,’ say shareholders

The U.S. dollar shortage is biting hard in Nigeria with its pangs being felt across all sectors of the economy.


As manufacturers grabble with difficulties in accessing dollars to pay for imports of raw materials and machinery and as lingering foreign exchange scarcity takes its toll on a foreign tuition payment, local investors in the capital market have expressed fear of likely takeover of listed multinationals by foreign investors, should the Central Bank of Nigeria (CBN) fail to grant Foreign Exchange (Forex) cover to repatriate their unclaimed dividend.

The multinationals constitute a larger chunk of the unclaimed dividend figure in the nation’s capital market. The investors, who expressed worry over rising unclaimed dividend totaling N158.44 billion and the high proportion of foreign investors’ share of unclaimed dividend, note that if foreign investors decide to buy more shares with their portion of unclaimed dividend, it would ultimately reduce the amount of shareholding owned by local investors, thereby giving foreign investors an opportunity to own a controlling stake in these multinational firms.

Local investors expressed the fear that foreign investors may subsequently apply for forceful takeover, which is in accordance with the Companies and Allied Matters Act (CAMA).


The Guardian learned that foreign investors constitute a large proportion of unclaimed dividends in multinational firms listed on the Nigerian Stock Exchange (NSE) such as Nestle, Unilever, and Nigerian Breweries, among others. A multinational company is a corporate organisation that owns or controls the production of goods or services in at least one country other than its home country.

A look at the shareholding structure of Nestle Plc, the biggest multinational company on the NSE showed that Nestle S.A Switzerland controls 66.50 per cent, while Stanbic IBTC Nominees hold 6.28 percent. Free float (Others) constitute 27 per cent. For Unilever Plc, Unilever Overseas have 75.96 per cent stake Stanbic IBTC Nominees control 5.01 per cent, while 19.03 per cent is free float.

Sunny Nwosu, the founder of the Independent Shareholders Association of Nigeria (ISAN), said local investors are ready to sell off their shares to foreign investors at any additional value on the share price.


“If they add N10 or N20 to the value of shares, Nigerians will sell because there is much hunger in the land, most of these retail shareholders have no money to meet needs of their families.

“Their existing holdings are already depressed in the stock market. But foreign investors have a lot of money to buy shares, so if they add any amount to the shares, local investors are ready to sell.”

The argument is against the backdrop of economic challenge, which has continued to dampen investment drive and trigger apathy in the Nigerian capital market since the 2016 recession, now fuelled by the effect of COVID-19 lockdown.


The declining growth and poor stock market performance, in addition to foreign exchange uncertainties have continued to depress share prices, causing retail investors untold hardship.

To reduce unclaimed dividend figures to the barest minimum, local investors have called on the Securities and Exchange Commission (SEC) to adopt all-inclusive approaches as listed firms release 2020 full-year results.

They argued that the lack of synergy between stockbroking firms, the Central Securities Clearing House (CSCS), and registrars pose a serious threat to the Commission’s determination to resolve problems associated with unclaimed dividends.

They pointed out that there is also a need to review the modalities of dividend claims of deceased persons, noting that the entire process, requirements (especially the aspect involving court process), and time lag are discouraging.


The Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion said if the Federal Government fails to make Forex available to foreign investors to repatriate their dividend, it would not only push local investors away from multinationals operating in Nigeria, it would also increase the quantum of unclaimed dividend in the capital market.

He said this is not healthy for the market because local investors must be encouraged to participate actively in multinational firms to create more wealth for the country.

“The Securities and Exchange Commission (SEC) and NSE have been working hard to reduce the quantum of unclaimed dividend so that people will have access to their return on investment.

“If they find it difficult at the Forex market, they may decide to buy more shares with the money and if this happens, Nigerian investors will be short-changed while foreign investors will eventually take over the companies.


“Government should find a way to make sure that these people have access to Forex, even if they want to invest, it should be a fresh investment. Before now, they find it easy to repatriate their money and that is why they can invest more because they know that they are getting good returns from Nigerian companies.

The President of the Ibadan zone Shareholders Association, Eric Akinduro said converting dividends to increase stake in any company may result in a takeover, take over the company which is not in the interest of local shareholders.

“Government should put structures in place to protect local shareholders because any individual or corporate body that has up to 50 per cent of any company is already a majority shareholder and has controlling power in terms of voting rights to influence the decision of such company.”

Director of the Centre for Economic Policy Analysis and Research (CEPAR), University of Lagos, Professor Ndubisi Nwokoma insisted that buying more shares with unclaimed dividends may be a disincentive to retail investors in the equity market, especially on a short term basis.


Nwokoma also argued that in the current circumstances, any restrictions may need to be minimal given the disincentive a wholesale restriction could have on capital importation.

He said: “one of the ‘carrots’ offered in the attraction of foreign investments is the possibility of repatriating income to the home country. In addition, buying more shares with the unrepatriated dividends may be a disincentive to retail investors in the equity market, at least in the short term.”

Sheriffdeen Tella, Professor of Economics at Olabisi Onabanjo University, Ago-Iwoye said: “It is unfortunate that the country finds itself in this situation but what cannot be helped must be endured. What is happening will discourage foreign portfolio investments in the future but when the forex is not available the country has to priotise the use of the available amount.

“If the investors reinvested their money at this point, it is better than financing their transactions over and above payment for industrial raw materials. So, they have to bear with the situation, which is not permanent.”


The House of Representatives had said that the huge unclaimed dividend is not a good picture of the state of the capital market and should be a source of concern to capital market watchers.

It recounted that, in 1999, the value of unclaimed dividends was put at N2.09 billion; N100 billion in 2017; N120 billion in 2018, but at the close of 2019, it had risen to N158.44 billion.

Chairman, House Committee on Capital Markets and Institutions, Babangida Ibrahim (APC, Katsina) stated this during an investigative public hearing on ‘The Need to Investigate the Rising Value of Unclaimed Dividends, Unremitted Withholding Tax on Dividends and their Attendant Effects on Nation’s Economy,” held at the National Assembly Complex, Abuja.

He had said: “We are aware of measures that have been taken by capital market regulators in the past to address the problem but we can all see that the problem remains and the situation is worsening by the day.


“Some of the measures include e-dividend, dematerialisation of share certificates, the publication of names of owners of unclaimed dividends, etc. All these measures are very commendable, especially the fact that they are primarily aimed at ensuring that shareholders get the benefits of their investment.”

Director-General of SEC, Lamido Yuguda, had said that about N29 billion of unclaimed dividends had been claimed by investors through the introduction of regularisation of multiple accounts.

SEC introduced the regularisation of multiple accounts in 2015 where it requested all shareholders with multiple accounts to harmonise them by filing e-dividend mandate forms and submitting the same to their banks or stockbrokers for onward transmission to their respective registrars.


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