Harmonising a single unique identity management system and updating the details of investors are some of the ways the Nigerian capital market is solving the rising issue of unclaimed dividend, according to Lamido Yuguda, director-general, Securities and Exchange Commission (SEC).
This means the Exchange working with the Central Bank of Nigeria (CBN) and other stakeholders in the markets to come up with one unique identity, not only for investors but also for issuers and operators in the market, Yuguda said.
The SEC director-general, who spoke at the 8th Investment and Capital Market Conference organised by BusinessDay last week, said there had been a rise in the amount of unclaimed dividend even on relatively new issues, and this had been at the heart of the Exchange to solve.
“It is disappointing to see that in the relatively new issues, we are still having unclaimed dividends. There is a fundamental problem in Nigeria. Identity management is very important,” the DG said.
An introduction of electronic dividend payment system (e- dividend) in 2015 was considered to be a lasting solution to issues regarding unclaimed dividend, but despite this, failed claims of already paid dividend to shareholders had continued to rise. As at the end of 2019, some N158.4 billion of unclaimed dividend sits with the commission, without any trace to shareholders of the funds.
That is an increase of 32 percent from the 2018 levels of N120 billion, questioning the country’s data tracking capability.
He explained that in resolving the issues, the Exchange was looking at leveraging Bank Verification Number (BVN) as a single identity as opposed to having numerous identity systems.
“We plan to leverage the BVN. It is an identity management initiative that has had impact in the country. Capital market transactions start from a bank account and this process ends the same way,” he said.
“The commission has mandated all CMOs to update KYC information, and has also continued engagement with operators to harmonise identity management systems and processes in line with the drive to create seamless investor experience,” he said.
“We have been working with the CBN to ensure that we have an identity management system that leverages the BVN that is unique to the capital market so that we don’t have different KYCs with different registrars or stockbrokers.
“This is still in the early stage, but we should be able to come up with an applaud-able framework within 12 months to address this,” Yuguda said, but did not provide the exact amount of unclaimed dividend as at date.
