Yuguda: Tax rebate should be reintroduced to capital market

The commission has done a lot to stem rising unclaimed dividends. For instance, we are working with the registrars to ensure that dividends are now distributed electronically through the bank accounts of investors rather than through dividend warrants which used to be the case.

Lamido Yuguda, the Director-General of the Securities and Exchange Commission (SEC), spoke to journalists on what the commission is doing to sustain investors’ confidence. HELEN OJI was there.

What is SEC doing about rising unclaimed dividends?
The commission has done a lot to stem rising unclaimed dividends. For instance, we are working with the registrars to ensure that dividends are now distributed electronically through the bank accounts of investors rather than through dividend warrants which used to be the case.

The problem is that investors are not mandating their accounts; they need to provide account details to the registrars so that the registrars will pay the dividends to their accounts directly.
We observed that there are issues with that process. Unfortunately, you will still need to go to all the registrars that you deal with and give the same information.

Right now, what we are doing is to try and get one point of supplying that information because when you give it to one registrar you do not need to provide that information across all the other registrars and these registrars of course will automatically get your details.

The second thing we have done is enlightenment. People need to be enlightened, a lot of changes have been made in the market and the fact that many people have not mandated their accounts means that many people are unaware of this e-dividend management mandate system.

Also, many companies have changed their names. Companies that are known with particular names may have changed to another and not all investors are aware of this and if they are having papers reflecting the old name, you find out that they may be confused and unaware of where to go.

What we are doing is trying to create more awareness of the way the capital market is organised so that investors can get their dividends back.

What is the exact figure of unclaimed dividends as at today?
The number of unclaimed in the nation’s capital market by the end of last year was about N177 billion. Unfortunately, this is an increase over the N168 billion recorded in 2022.

What does the commission plan to do to stakeholders reported to be frustrating the process?
In terms of the e-dividends, I earlier mentioned that the commission works through a variety of sanctions and the capital market operators are aware of that. We agreed that whoever is found guilty of frustrating the e-dividend mandate management system will face SEC sanctions.

What is the commission doing to stem the proliferation of Ponzi schemes?
The SEC has been fighting a serious war against ponzi schemes, and we have been alerting people to the proliferation of fraudulent investment outfits. We have advised investors to deal with only licensed operators that are registered with the commission.

We have their list on the SEC website and we have always said that if you go to an operator or when an operator approaches you, you must confirm that he or she licensed with the SEC.

We have our numbers on how to reach our offices in the zones and we have done a lot of sensitisations in terms of seminars and webinars, to discourage people from patronising ponzi schemes.

Unfortunately, a lot of people have continued to patronise these people. We have cases that were reported to us and our enforcement department and the police unit have been on many of these cases trying to resolve them.

I would like to use this opportunity to say that it is not very difficult to recognise a ponzi scheme and the people that go into it are probably aware that there is a risk in such investment. This is because when somebody tells you that he or she will pay you 10 per cent return per month on your investments, that means if you invest a million naira, every month you get 10 per cent of that which is N100,000.

This is probably too good to be true because when you add up the yearly rate of the return, you find out that it is higher than the return that any decent investment can offer.

Some people think they can be amongst the first set to invest in such a business and probably have the opportunity to exit before it collapses.
But you may be taking a huge risk because you do not know if you are the first. You may be the number 1000 on the list and it could be that it is your money that could get trapped.

It is important for our investors to understand the tale-tell signs of a ponzi scheme and to alert the commission if they need some clarity. We have contact numbers, you do not have to come to us. You can send WhatsApp, email or walk to any of our offices that are close to you.

Is SEC working with other agencies to contain the activities of ponzi schemes?
We have been working with other agencies of government to reduce the access of ponzi schemes to the various advertising platforms that we have such as the internet, print media and electronic media, especially on the radio and television. This is very important because ponzi schemes are a cancer to the capital market, a lot of money has gone down the drain and it is unacceptable to continue to witness this kind of loss of investment by the people.

In terms of the synergies between the commission and law enforcement in the fight against ponzi schemes, I can say that there is very good synergy and harmony between the SEC and the law enforcement agencies. It is worthy to mention that the SEC has a detachment of the Nigerian Police working directly with the commission on capital market matters including ponzi schemes. We have a good collaboration with the Nigerian Financial Intelligence Unit (NFIU) and the EFCC on the fight against money laundering and ponzi schemes.

The collaboration between the organisations is very strong and we are always interacting among ourselves. We are expanding to other organisations that have control over our airwaves and internet systems because you still see a lot of adverts for ponzi schemes on these platforms. We have very strong collaboration and we engage continuously with these agencies to eliminate all ponzi scheme operations in our market.

Are there plans to take enlightenment to the streets?
For enlightenment, we have been working with various bodies to make sure that our message gets to the streets.
We are on the board of the advertising practitioner’s council. We are there because we thought that we should bring to the council the concerns of the capital market because of the issue of ponzi schemes.

We have recently signed a momorandum of understanding (MOU) with the Lagos State Signs Authority in terms of having Bill Boards at very strategic locations in Lagos state, warning the citizens about the ills, the risks, the dangers of ponzi schemes.

These are some of the things we do and we will continue to take it further to the entire length and breadth of this country, working with various state government, local and various agencies of government including non-governmental organisations to make sure that the message gets to the nooks and crannies of the country.

This is something that is depriving a lot of households of their hard-earned money. Money that could have been used for a lot of other meaningful needs is now surrendered to fraudsters. When they come to you, trying to convince you, they come in the form of very honest people, giving you all sorts of promises in terms of financial return but once they get your money the story begins to change.
Can you elaborate more on the revised Master Plan?
The revised capital market Master Plan will be presented at the next Capital Market Committee (CMC) meeting. As you know, the Master Plan is a 10-year document that was launched in 2015. You will agree that between 2015 and now, a lot of things have changed and a lot of the assumptions used in designing the first master plan have changed. So the mid-term review was an attempt to revise the document so that the assumptions that would be relevant for the next five years are used and the structure of the capital market and the corporate world as we know it today, have significantly changed from what they were in 2015.

So all these have been put into consideration and added to the revised capital market master plan to make it more relevant and enable the SEC to realise the goals of the capital market master plan as quickly as possible.

We urge stakeholders to attend the launch online so that we can get the details and of course as soon as it is available we will have the full edition of the master plan on our website and anyone that is interested can download and study it.

Before now, corporate bonds enjoyed tax exemption but that has not been re-instated by the government. How does that affect investments in the capital market currently?
It is important to note that for any asset class investment, whether investors invest in that asset class or not is a function of many considerations and tax is only one part of the consideration. It is an important consideration, especially when the tax rate is high, but for now, given that there are so many other considerations, we have liquidity as a consideration, the return, the risk, the time horizon of the investor, the liquidity preference of the investor, and any other unique circumstances that may be faced by the investor.

However, it is too early to give more information on the reinstatement, but tax is a very important part of the investment process that is why we believe that tax rebates should be reinstated and the market also believes that. We have been working with the tax authorities and the fiscal authorities to advocate for reinstatement of the capital market.
What is the state of the review of the Investment and Securities Act (ISA)?
The SEC has been working with the National Assembly ( NASS) on this and it has passed the second reading at the House of Representatives and the members are currently in recess but we expect that once they resumes, other processes required in terms of public hearing and others will follow quickly.

We appreciate the support of relevant committees of the NASS and the entire leadership in this process and we expect to have the ISA revised and enacted into the new law possibly by the end of this year.

There have been various visits by the Securities Commissions from Ghana and Zimbabwe. What were the visits about?
The visit of SEC Zimbabwe staff is a familiarisation exercise. Different capital market regulators face challenges in their markets and they might be unaware of what other regulators do in their respective markets. They organise these visits so that they can come and learn what we are doing and see how they can apply these lessons to their domestic market.

So, we have had the SEC Ghana and Zimbabwe and typically they come with quite several people representing different aspects of their organisations so that they can learn from us. We also do the same to other regulators to learn from them too.

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