- Good times here for investors
That more than nine million investors are yet to key into the electronic dividend payment (e-dividend) system shows that they are yet to appreciate the essence of the new arrangement. There are more than 12 million investors in the stock market. However, only about 2.2 million of them have keyed into the new scheme. Under it, dividends are to be paid directly into the investors’ accounts, as against the former practice of sending dividend warrants that they then pay into their accounts.
One issue, however, is that many investors do not bother to lodge the dividend warrants, obviously because they feel the dividends are often small and therefore not worth the trouble. Another issue is that dividend warrants in the past could only be paid into the current accounts of investors. Not all investors had the patience to go through the stress of opening such account.
These challenges led to the huge amount of unclaimed dividends, which, as at December 31, last year, stood at N117billion. About N86billion of this was in the custody of the paying companies and N13.7billion in the custody of the registrars. A situation where abouN117billion is lying fallow is unhelpful to the economy even as it leaves room for corruption, as some unscrupulous officials could be feeding fat on other people’s sweat.
Indeed, this explained why the Securities and Exchange Commission (SEC), in collaboration with the Central Bank of Nigeria, Nigerian Interbank Settlement System (NIBSS) and other stakeholders flagged off the E-Dividend Mandate Management System (E-DMMS) in November 2015.
Between then and February this year, about N42.2billion had been paid into investors’ accounts from the backlog of unclaimed dividends. “The advantage of the e-dividend is not only to enable investors collect subsequent dividends electronically, but it allows all accrued dividends to be credited to investors’ bank accounts. This will stem the rising unclaimed dividend in the capital market,” SEC stated.
Obviously, the large number of unregistered investors for the e-dividend payment had led to the extension of the June 30, 2017 deadline for the cessation of dividend warrants and adoption of the full e-dividend option by SEC, to December 31, 2017. “All investors in the Nigerian capital market are therefore advised to take advantage of this extended grace period by approaching their bankers or registrars for enrolment before the deadline,” SEC said.
Characteristically Nigerian, we may not witness a rush for the exercise unlike the Bank Verification Number (BVN) and other initiatives, again due to the small amounts that most of the investors reap as dividend. Even for the BVN, most bank customers waited till the tail end of the time permitted before registering. And this was due to the fact that they knew they would not be allowed to do full banking transactions on their accounts unless they registered.
However, it is good that signing on to the e-dividend portal is a continuous process because even after the expiration of the December 31, 2017 deadline, those who intend to key into the system can still do so; the difference being that they would have to pay as against the present arrangement where SEC picks the bill. We urge SEC to continue to enlighten the investors on the need to register for the e-dividend scheme now and even after the expiration of the deadline.
As noted by SEC’s Director-General, Mounir Gwarzo: “In this country, we have never had this kind of initiative that has reduced unclaimed dividends like we have today. Apart from the investor getting his dividends wherever he is, that investor will be able to get dividends that in the last five years he has not been able to get. The e-dividend is for the interest of retail investors.”
It can only get better. With time, investors will see the need to join such a commendable initiative.
