By MICHAEL EBOH
The low value of dividend currently being paid out to shareholders is further increasing the amount of unclaimed dividend in the vaults of companies listed on the Nigerian Stock Exchange. Several retail shareholders are ignoring the dividend companies have declared because the value is negligible. Some are N50, N100 and N500. These, many say they can not waste their time to claim.
As a result, the value of unclaimed dividends in Nigeria, put at about N52 billion as at December 2011 by the Securities and Exchange Commission, SEC, is set to further escalate, unless something is done to urgently address the numerous challenges confronting the process of dividend payment and collection.
According to stakeholders who spoke to Financial Vanguard, the major factors that will account for the astronomical rise in unclaimed dividends value is the recently introduced Central Bank of Nigeria’s, CBN, Nigerian Unified Bank Account Number, NUBAN, scheme and investors’ rising apathy towards the collection of dividends with negligible or insignificant amounts.
Fitch Rating Agency, however, believes that internal capital generation in Nigeria banks needs to be addressed in the sector as the generous dividend policies demanded by investors are not conducive to sustainable loan book growth in the medium-term. The new report considers that many Nigerian banks have thin levels of Fitch Core Capital, which are lower than is appropriate for Nigeria’s difficult operating environment.
According to Mr. Taiwo Oderinde, National Coordinator, Proactive Shareholders Association of Nigeria, PROSAN, presently, we have billions of naira as unclaimed dividends, and the CBN has started another move, in form of the NUBAN policy that will serve to aggravate the problem instead of solving it.
“In addition to the problem posed by NUBAN is the issue of dividends with low value. If a shareholder living in a rural area or a remote location has a dividend warrant of about N200 or N300, it will be economically unwise for that individual to spend about N500 or N1, 000 on transportation to the bank to cash or pay that amount into his account.”