Why I Support Govt’s Plan To Manage Unclaimed Dividend Funds- Uwaleke
Professor of Capital Market Studies at the Nasarawa State University, Uche Uwaleke, at the weekend in Lagos expressed support for the Federal Government’s plan to manage Unclaimed Dividends and Dormant Bank Accounts in the country.
In a keynote presentation at the 2020 annual conference of the Capital Market Association of Nigeria (CAMCAN), Uwaleke said allowing the companies that declared the dividends to keep them at the end of a statutory period amounts to a moral hazard.
Speaking on the topic “the capital market in post COVID-19 Nigerian economy,” Uwaleke said the fact that the funds would eventually revert to these companies is enough motivation to continue growing it to the detriment of the shareholders.
As part of the moral hazards, he said in the same way, if deposit money banks are allowed to keep and continue trading with monies held in dormant accounts, “they (the banks) will do all in their power to ensure you don’t get it (money in he dormant accounts).
Contrary to oppositions to the government’s plan, Uwaleke said “the law is in line with what happens in other jurisdictions,” and is part of what is called unclaimed assets in countries like the UK, US, among others.
“Some states in the US takes over any such assets after a dormancy period.
“(The aspect of the proposal) I don’t support is bringing in the AGF (Accountant General of the Federation) to manage the pool.
“I think the stakeholders should be brought into its management,” he said in response to a question.
He however applauded the recent policy of the Central Bank of Nigeria (CBN), directing International Money Transfer Organisations to pay beneficiaries in original currency of the transaction, rather than the previous practice of paying in Naira at a predetermined rate.
The policy, which came into effect last week, he believes, would check the activities of currency speculators in the country and ensure a stable exchange rate for the Naira, explaining that it would enhance liquidity since the official Investors and Exporters’ Window is no longer very active.
On the outlook for the economy, Uwaleke said the COVID-19 pandemic is revealing an array of new opportunities in Nigeria’s non-oil economy which drove the GDP as shown in the latest report.
Meanwhile, declaring the conference open, Director-General of the Securities & Exchange Commission (SEC), Lamido Yuguda, assured that deliberate efforts will be made to attract retail investors back to the market.
Yuguda, who spoke through Stephen Falomo, Director, Lagos Office of the commission, said already, “investors with multiple accounts in the market are being allowed to harmonize and consolidate their numerous accounts into a single one and claim their accrued dividends. This is in a bid to encourage more participation of the domestic investors in the market.”
As part of efforts to deepen the market, he said the SEC is exploring various avenues to increase the number of companies and instruments available market to boost market capitalization, besides contributing its quota to national economic development.
The commission, he continued, “is practicing zero tolerance for market infractions. Any market operators that are found wanting will be adequately penalized for any wrong doing in the market.
“Therefore, the SEC is currently improving its monitoring and surveillance system to efficiently identify any form of malpractices in the market. If we must attract and retain investment and well as improve market confidence, we must be ready to show that investors will be protected.”
As part of ensuring efficient market regulation “and timely spotting of any misleading information in the operators’ books, staff capacity is being enhanced to regulate the market in a serious and dedicated manner. This will improve efficient operation of the Nigerian Capital Market,” he stressed.
Photo caption: From left, Prof. Uche Uwaleke, Financial Economist and Professor of Capital Market, Nasarawa State University, Keffi; Oluwole Adeosun, CEO Chartwell Securities and Vice President Chartered Institute of Stockbrokers; Seyi Owotoro, President, Institute of Capital Market Registrars; Mrs. Chinyere Joel-Nwokeoma, Chairman, Capital Market Correspondents Association of Nigeria; Stephen Falomo, Director, SEC Lagos Zonal Office (representing the SEC DG); Ms. Jumoke Olaniyan, Vice President, Market Architecture, FMDQ Securities Exchange Limited (representing Bola Onadele, MD FMDQ); Ms. Hafsat Rufai, Head Operations Lagos Zonal Office; and Lanre Odufuwa, Team Lead, Primary Market, at the Nigerian Stock Exchange (NSE).