A staggering N30 billion in unclaimed dividends has accumulated among five listed firms in Nigeria, raising alarm bells about the effectiveness of current measures to address the issue. Despite efforts by the Nigerian Securities and Exchange Commission (SEC) to check the trend, the growing backlog has sparked concerns among investors, listed companies, and market operators.
Dangote Cement Plc leads the pack with a total unclaimed dividend of N5.2 billion, followed closely by Nigerian Breweries Plc with N7.1 billion. Lafarge Africa Plc, UAC of Nigeria Plc (UACN), and Nestlé Nigeria Plc also feature prominently on the list, with unclaimed dividends of N2.95 billion, N5.4 billion, and N8.9 billion, respectively.
The surge in unclaimed dividends comes amidst rising regulatory moves, including the e-dividend mandate, investor education, and know-your-customer (KYC) compliance measures. The SEC has worked to ensure dividends are paid directly into shareholders’ bank accounts and has created a new application that enables investors to download and access their dividends in real-time.
Yet, the numbers continue to rise. For investors, unclaimed dividends represent lost earnings that could have been reinvested or used for financial needs. Many retail investors, particularly those with small shareholdings, are unaware of the funds accruing in their names. In cases where shareholders have passed away, heirs often struggle with bureaucratic hurdles to claim inherited dividends.
Companies also face challenges due to the rising backlog. A high volume of unclaimed dividends signals weak shareholder engagement, which could erode confidence and affect stock market participation. At a broader level, the accumulation of unclaimed dividends raises concerns about the efficiency of Nigeria’s capital market.
“A market where investors routinely miss out on their entitlements risks being perceived as inefficient, which could discourage both local and foreign investment,” said Patrick Ajudua, President of the New Dimension Shareholders Association of Nigeria.
Ajudua called for a more practical approach to resolve the unclaimed dividend issue. He also stressed the need for legislative intervention to address legacy issues, including poor identity management systems, technological inefficiencies, and regulatory lapses that contribute to the rising figures.
The SEC, at a post-Capital Market Committee (CMC) meeting in Lagos last year, disclosed that total unclaimed dividends in the capital market had increased from N190 billion in 2023 to N215 billion as of March 2024. The trend has been decades in the making, with figures rising from N2 billion in 1999 to N41 billion in 2011 and N80 billion in 2014. By 2020, it had surged to N168 billion, further highlighting the scale of the problem.
Market operators believe that beyond enforcing e-dividend policies, regulators and listed companies must take more proactive steps. The SEC’s push for solutions, including a proposed trust fund for managing unclaimed dividends, has yet to yield significant results.