Unclaimed dividends rise to N50b
THE $1trillion market capitalisation target set by the Nigeria Stock Exchange (NSE) for the year 2016 may remain a mirage, if the Federal Government fails to facilitate the unbundling of oil sector through passage of Petroleum Industry Bill (PIB) and encourage other strategic companies, especially the telecommunications industry, to list on the Exchange. The Chief Executive Officer of the Nigerian Stock Exchange (NSE), Oscar Onyema, said this at the World press conference, which took place in Lagos Thursday.
He also put the figure of unclaimed dividends in the Nigerian capital market at N50 billion.
Onyema, apparently irked by the low contribution of the market capitalisation to the nation’s Gross Domestic Product (GDP), explained that the concerted efforts and support of the government are paramount to unbundle various sectors of the economy, in order to attract the needed investment in the Nigerian capital market.
Reviewing the 2012 market performance, against the 2013 outlook, said: “The market capitalisation of the NSE is one of the lowest in Africa in terms of GDP. When we gave the target, we said a number of things needed to be aligned. Government said it wanted to privatise power. We need the support of the government to ensure that the 16 utilities are listed with the telecom companies.
“The National Assembly should approve and pass the Petroleum Industry Bill to provide unbundling of companies and enable the oil majors to take positive decision. The oil and gas sector is slowing down because everybody is watching to see what is happening.”
He however, expressed optimism that the measures put in place to deepen the market would attract new issues into the market in the current year, despite the challenges around liquidity and depth, adding that concerted efforts to drive improvements in market participant remains their major focus.
“CBN’s efforts to achieve single-digit interest rate, as investor confidence measures implemented by the NSE mature, we expect that a growth trend similar to that experienced in Q4 2012 will extend into 2013.”
On the fixed income side, Oscar submitted that the relative attractiveness of FGN bonds would continue for local and global investors, as a result of record-high yields.
“With the upcoming inclusion of Nigerian FGN bonds in the Barclay’s Emerging Market Local Currency Bond Index, this should keep the nation’s bonds in the international spotlight. Furthermore, foreign issuers such as the International Finance Corporation (IFC) are expected to enter the Nigerian bond market this year.
“Other contributing factors to optimism about the capital market include (a) early passage of the national budget, which creates an impression that fiscal policy is being prioritised, the pronouncement to begin investing proceeds of the Sovereign Wealth Fund (SWF) in March 2013, elimination of VAT and stamp duties, which should take effect in 2013, freeing up funds for capital market investment; and continued product innovation by the Exchange, such as the commencement of secondary bond market trading, and the introduction of new indices and ETFs,” he added.
Unclaimed dividend had gradually mounted from over N40 billion.
The House had last year, passed a resolution mandating the House Committee on Capital Market and Institutions to investigate the high volume of unclaimed dividends in quoted companies in Nigeria and report to the House within four weeks
Out of this figure, 84.7 per cent (N42.5 billion) was held by nine out of 23 registrars who submitted their returns.
“This legislative attention to the intractable issue of unclaimed dividends is a positive development. It was out of concern for this unfortunate situation in which returns on shareholders’ investment by way of dividends is perennially locked in the unclaimed dividends saga that as far back as in 2002, the SEC sponsored a bill in the National Assembly for an act of parliament which will set up the ‘Unclaimed Dividend Trust Fund’.
The SEC had explained that if passed into law, the “unclaimed dividend bill” would have removed the point of domicile for unclaimed dividends from their originating companies to another party managed trust fund and remove the incentive which feeds the collusion between certain players in the market, to frustrate shareholder access to dividend accruals on their investment.