Senate rules out the use of unclaimed dividends to fund 2021 Budget

The Nigerian Senate has ruled out the use of unclaimed dividends to fund the 2021 Budget.

The objection was raised by Senator Suleiman Kwari, the lawmaker representing Kaduna North District Zone I, at today’s senate plenary in Abuja.

While speaking on the creation of an unclaimed dividend and unutilised bank balance trust fund where dividends declared and unclaimed will be held, as stipulated in the 2020 Finance Bill, Kwari said the subsequent request of these dividends by the owners would deter the government’s activities if relied on.

Kwari called on the Federal Government to rule out the use of unclaimed dividends to fund the 2021 budget and consider a more sustainable and relatively option like the Pension Fund Administrative instead.

What they are saying

Speaking at the Senate plenary today, Senator Suleiman Kwari said: “I wish to commend some of the ways the Executive has put before us, measures to fund the 2021 budget. Some of them are really commendable. But Some of the ways here might be counter-productive.

“I want to single out the use of unclaimed dividend to fund the 2021 budget. I think it should be reviewed by the Executive because if eventually, the owner of these funds come up to claim them, the fund will not be readily available for use.

“I urged the Federal Government to look at something like the Pension Fund Administrative instead of hoping on the unclaimed fund.”

What you should know

• The Securities and Exchange Commission earlier this year disclosed that the total value of unclaimed dividend in the Nigerian capital market closed 2019 at N158.44 billion, with over N100 billion of the dividend from unclaimed shares.
• However, the House Committee on Capital Markets and Institutions raised an alarm over the growing unclaimed dividends in the capital market, which was projected to cross the N200 billion mark at the close of 2020.
• Following this projection, Mrs Zainab Ahmed, Nigeria’s Minister of Finance at a webinar organised by KPMG in collaboration with the Ministry of Finance, Budget and National Planning, disclosed that the Federal Government was considering the creation of an unclaimed dividend and unutilised bank balance trust fund where dividends declared and unclaimed will be held.
• Through this, the unclaimed dividends would be handed over to the government, as trustee, in the perpetual fund created under the supervision of the CBN & DMO, with private sector involvement in the governance of the fund.