Why Nigerians Keep Losing Their Money in Unclaimed Dividends

Unclaimed dividends

I don’t think we have an accurate record of unclaimed-dividends in Nigeria.

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Some 17 years back, Nigerian banks went through a re-capitalization process that saw them selling shares to the Nigerian public. It became a fad of sort among local civil servants, parents, undergraduates, aged as they all became customers of these banks.

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Over the years there has been an increase in people buying shares in companies and an increase in the volume of shares bought. However, this has been a hurried reaction as many people still do not quite get the implications of what it means to buy shares.

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Many have entered into the world of shareholding without really being prepared for it and without having adequate knowledge and information. They only had what the eager stockbrokers who wanted to sell had to tell them.

Therefore, it isn’t surprising that the Security and Exchange market in Nigeria keeps having problems with unclaimed dividends. As of the 14th of July, 2016, unclaimed dividends had reached 80billion naira in SEC coffers.

With the introduction of the e-payment system put in place to decentralise dividend payment and make it easily accessible to customers, it has still proven more or less an exercise in futility.

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Below are 4 reasons why Nigerians continually lose their money in unclaimed dividends yearly:

1) Lack Of Information

Many shareholders suffer through a lack of information and proper awareness about the progress of their shares. This lack of investment and financial education on the part of several retail shareholders is the reason why issues of unclaimed dividend keep persisting.

Many people don’t have the diligence of following through stock exchange pages on newspaper publications in order to really know how far their shares have gone in the money market, what profit the company is now netting and how to get in contact with their registrars.

Also, the way the dividends are presented in a “cheque-like” itself presents a challenge to several shareholders.

Because of the cheque-like nature of dividend warrant and the intangibility of some dividends, many shareholders who received their warrant merely lose or misplace them somehow.

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2) Illiteracy

Many of the people who bought shares at the inception of the corporate revolution in Nigeria were mostly illiterates. Because they were not properly schooled on how to track their dividends or claim it, some of them were swindled by the registrars or stockbrokers they appointed to protect their interest or just lost contact with them.

Some of such unclaimed dividends are still available to be claimed by the family of such people, but no one knows. Family financial history should be checked and old documents have often revealed hidden or forgotten treasures somewhere.

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3) Death

There are many shareholders with huge investments in Nigerian Banks who have died and there is no one to lay claim to their dividend.

Sometimes untimely deaths coupled with the absence of a will can cause fortunes to get missing. In Nigeria, a lot of people seem to have trust issues even among their families and keep their investments to themselves. This is not wise because such fortune can easily be lost.

4) Change In Address

Many shareholders have not bothered to communicate vital changes in their address details to the registrars in cases where they moved to a different location. Some were tenants at the point of purchasing shares but are now homeowners whose new records are not updated with the registrars.

Their dividend warrant keeps going to the old address and after many returned warrants, the registrar may altogether suspend further communication based on the previous details.

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These poor attitudes on the part of shareholders are major reasons for unclaimed dividends. This is explained by the fact that the largest chunk of unclaimed dividends belongs to individual retail shareholders and are scattered in little amounts.

In effect, many shareholders still have ample chances to claim their monies that are lying unclaimed across the country. However, re-validation will become difficult if there is an irregularity of signature and no valid identity card.

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There has also been a commendable improvement to the payment system. Registrars now pay dividends directly into the owner’s account-either current or saving deposit account. This they do by providing an electronic-dividend (e-dividend) mandate form, either separately or usually attached to the company’s annual report. So let’s all secure our investments. The value of shares can actually rise exponentially.

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