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Business

Shareholders move against FG’s establishment of unclaimed dividend trust fund

Shareholders have rejected the establishment of an unclaimed dividend trust fund being proposed in the Finance Bill 2021.

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unclaimed dividend, SEC restrains fintech company, Chaka from advertising or offering for sale shares

Shareholders under the Independent Shareholders Association of Nigeria (ISAN) have rejected the establishment of unclaimed dividend trust fund proposed in the Finance Bill 2021.

This disclosure was made in a statement issued and signed by the National Coordinator of ISAN, Dr Anthony Omojola.

READ:  SEC’s e-dividend mandate criticised for being difficult 

According to a news report by NAN, Dr. Omojola, disclosed that the creation of the trust fund and transfer of unclaimed dividends into the federation account was uncalled for, as the process may encourage corruption and nepotism to the detriment of the shareholders/beneficiaries of returns on investments.

He explained further that dividends were private wealth of investors, either individuals or corporate entities and that the conversion of private wealth to Federal Government revenue is a violation of the right to own property/assets, as guaranteed by the 1999 Constitution.

READ: SEC petitioned to probe the unclaimed dividends of delisted companies

According to him, there is an adequate provision that, in the event of failure to claim, such funds should revert to the operations of the companies.

Dr. Omojola concluded that the proposed bill would not serve the interest of shareholders, as it would only cause unwarranted hardship and misappropriation of shareholders’ investments and funds.

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READ: FG to withdraw $150 million from sovereign wealth fund, to borrow $6.9 billion

What they are saying

Dr. Omojola, who spoke on behalf of the shareholders under the aegis of ISAN said:

  • “Dividends, including unclaimed dividends, are funds generated by private companies and made available to shareholders in line with the provisions of CAMA and the Company Memart. There are good structures around this position, the government should enhance the structures.
  • “Our avowed interest is the protection of the cherished values and welfare of shareholders in general – members and non-members, nationwide. We want to state that the proposed bill will not serve our interest now and in the foreseeable future. In fact, it could cause unwarranted hardship and misappropriation of our investments. For this and other numerous reasons, we plead that the Finance Bill 2021 (Part V) be expunged.”

READ: SEC threatens to suspend outdated accounts, to address unclaimed dividends 

What you should know about the unclaimed dividend trust fund

In line with the information gathered by Nairametrics, the following is the timeline on the creation of an unclaimed dividend and unutilized bank balance trust fund, since 13th of July:

  • On July 13th, 2020 Nairametrics reported that recent data collected by Securities and Exchange Commission suggested that the total value of unclaimed dividend in the Nigerian capital market closed 2019 at N158.44 billion and over N100 billion of the amount are from unclaimed shares. The development revealed that the figure has been on the increase despite the introduction of e-dividend, which was introduced by SEC in 2015. From about N100 billion in 2017, unclaimed dividend closed 2018 at over N120 billion.
  • According to a news report by The Cable on November 13th, 2020, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, at a webinar organized 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 unutilized 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.
  • However, on November 19th, 2020, the House Committee on Capital Markets and Institutions during an investigative public hearing on “The Need to Investigate the Rising Value of Unclaimed Dividends, Unremitted Withholding Tax on Dividends and their Attendant Effects on Nation’s Economy,” which held at the National Assembly Complex, Abuja, raised alarm over the growing unclaimed dividends in the capital market, which was projected by the Chairman of Committee, Babangida Ibrahim, to cross the N200 billion mark at the close of 2020.
  • Consequently, on November 23rd, 2020, Securities Dealers under the Association of Securities Dealing Houses of Nigeria (ASHON), through the Chairman of the Association, Onyenwechukwu Ezeagu, rejected plans by the Federal Government of Nigeria to manage unclaimed dividends – which is projected to hit N200bn by the end of this year, according to an earlier statement by the Chairman of the House Committee on Capital Markets and Institutions.
  • At the Senate plenary in Abuja, on December 2nd, 2020, during a session on the creation of an unclaimed dividend and unutilized bank balance trust fund, as stipulated in the 2020 Finance Bill, Senator Suleiman Kwari raised an objection against the move. He called for a more sustainable and relatively stable option like the Pension Fund Administrative, noting that the subsequent request of these dividends by the owners would deter the government’s activities if relied on.

READ: SEC’s DG on how E-dividend will boost capital market liquidity

READ: Update: FEC approves 2020 Finance bill as FG denies plans to increase taxes

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Omokolade Ajayi is a graduate of Economics, and a certificate holder of the CFA Institute’s Investment Foundation Program. He is a business analyst, and equity market researcher, with wealth of experience as a retail investor.

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Business

Microsoft Broadband Deal: Implications and how to maximize for AfCFTA

The world is gradually transitioning into a knowledge and digital economy and Nigeria cannot be left behind.

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Internet World Stats, Nigerian Communications Commission remittance, Network operators in Nigeria, Telecoms companies in Nigeria, MTN Nigeria, Airtel Africa, Globacom data, 9mobile court case, Top 10 states in Nigeria with the highest Internet subscribers , Telecommunications: The bright spot in a fragile economy, Telcos add 5.64 million voice and data subscribers in Q3 2019 - NBS , Alleged N200bn Debt: EFCC, DSS to probe telcos, Network glitch, as poor internet speed continues to impede banking services, Telecoms record 725% increase in foreign capital investment, as GDP contribution hits N6 trillion, Coronavirus: Instant messaging platforms, Telcos raking in funds from the work-from-home policy, Telecoms: Bright spot amidst the gloom, Nigerians lambast MTN, Airtel for offering free SMS, ignoring request for free data, airtime

On the 3rd of May, 2021, The Federal Government announced a deal with Microsoft through the Federal Ministry of Communications and Digital Economy for the development of high-speed internet infrastructure across the six regions in the country.

Microsoft disclosed in a statement saying: “Six regions in the country have been earmarked for the development of high-speed internet infrastructure. Microsoft’s Airband team will work closely with local partners to improve broadband connectivity in these communities while also assisting with the design and implementation of hyper-scale cloud services.”

The FG stated that Microsoft’s AirBand Tech has enabled rural and underserved communities gain access to high-speed internet connectivity, tapping into the unused broadcasting frequencies of television white spaces. The technology is also cheaper and faster to deploy than fibre and is coming at a time when telecoms have been the brightest spot of Nigeria’s economy in a period of declining growth.

With Nigeria looking to diversify the economy, deeper broadband penetration can act as a catalyst for Nigerian service exports for the African Continental Free Trade Area (AfCFTA).

Telecoms and Internet penetration in Nigeria

According to the last Gross Domestic Product Report released by the National Bureau of Statistics (NBS), Nigeria’s information and communication sector grew by 13.8% in full-year 2020 compared to 11.08% recorded in 2019 and 9.65% in 2018, comprising majorly of Telecommunications and Information Services, Publishing, Motion Picture, Sound Recording, and Music Production, and Broadcasting.

The sector also contributed 15.06% to aggregate real GDP in Q4 2020, with Telecommunications & Information Services growing by 17.64% in Q4 2020 compared to 17.36% in Q3 2020 and 10.26% in Q4 2019.

Internet users

The Q4 2020 telecoms report by the National Bureau of Statistics (NBS) revealed that the number of internet subscribers in Nigeria increased from 126.1 million as of Q4 2019 to 154.3 million in Q4 2020, representing a 22.38% increase, with Lagos, Kano, Oyo, FCT, and Ogun state recording a total increase of 8.96 million new internet subscribers between 2019 and 2020.

The reason for the sector’s impressive performance is not far-fetched as more Nigerians were home during the lockdowns and spent more time online, working remotely for Nigerian and foreign firms.

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Broadband Penetration

To develop a robust service sector economy, broadband penetration is needed to maximize service economy exports in IT, Finance, Entertainment, and many others.

According to a report by MICUS Management Consulting GmbH, “companies adopting broadband-based processes improve their employees’ labour productivity on average by 5% in the manufacturing sector and by 10% in the services sector. The development of broadband allows the acceleration and automation of information flow between companies, which enables an increased specialization in knowledge-intensive activities.”

With the rising number of internet users in Nigeria, broadband penetration has also witnessed a boost. Minister of Communications and Digital Economy, Dr Isa Ali Ibrahim Pantami disclosed last year that Nigeria increased its broadband penetration rate from less than 6% in 2015 to 43.30% by August 2020 which translates to 82, 653,247 broadband subscriptions in the country.

It is fair to say that with the rising broadband and internet penetration in Nigeria, the nation’s potential for skilled service export and trade is a gold mine that should be harnessed for future African trade, especially as Africa agrees to enter into tariff-free trade.

The AfCFTA

The African Continental Free Trade Area (AfCFTA) agreement which took off on January 1, 2021, is expected to create the world’s largest free trade area measured by the number of countries participating. The pact which connects about 1.3 billion people across 54 countries with a gross domestic product (GDP) valued at $3.4 trillion, has the potential to lift 30 million people out of extreme poverty.

Nigerian Economic Summit Group (NESG) also urged that for the FG to maximize the Africa Continental Free Trade Area (AfCFTA) agreement, it needs to direct its efforts into strengthening domestic value chains.

“Resource-based countries, such as Algeria, Egypt, and Nigeria – which collectively account for approximately 50% of Africa’s GDP – contribute only 11% to intra-African trade.

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In terms of intra-African exports, the estimates also showed that manufacturing exports will have increased by 110%  followed by agricultural exports (49%) and services exports (14%) by 2035.

Nigeria could reap more gains through export diversification away from crude oil, as manufacturing exports currently account for an average of 9 % cent of the country’s total exports,” Mr Laoye Jaiyeola, Chief Executive Officer, NESG said.

From what the NESG concluded, it is safe to say that Nigeria has enough potential to cover with Intra African trade, especially through broadband-inspired service exports, which will create employment and improve productivity.

Prince Nwafuru, an international trade lawyer with Paul Usoro & Co, leader of one of the Commercial Dispute Resolution & Litigation Teams, and a Nairametrics trade analyst says improved broadband penetration will lead to reduced costs and more productivity; and the added innovation infrastructure funding will boost innovation rankings for Nigeria.

What does improved broadband mean for Nigerian tech jobs and service jobs and how would it improve earnings?

“The world is gradually transitioning into a knowledge and digital economy and Nigeria cannot be left behind,” Nwafuru said.

“In order to build a strong ecosystem for the digital economy, Nigeria requires strong broadband and ICT infrastructure. The broadband penetration based on the last report from the NCC is less than 44% with the plan to reach 90% penetration over the next 5 years. The speed and cost of data remain a major challenge for the service and tech sectors. Faster internet is required to drive e-commerce and digital economy. Improved infrastructure will definitely lead to a reduction in the cost of doing business and increased earnings for the tech and services industries,” he added.

Bottomline

The tech and service ecosystem requires incentives and enabling infrastructure to scale and serve the large market that exists in Nigeria. Though the e-commerce space has recorded some growth in recent years more needs to be done to position Nigeria to serve the rest of Africa.

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Sadly, Nigeria was not even amongst the top 10 African Countries in the Global Innovation Index for 2020, which ranked Mauritius, South Africa, Kenya, Tanzania, Rwanda, Egypt, Senegal, and Ghana above the country, despite the fact that Nigeria boasts of young and innovative population. This paradox further underscores the need for investment in enabling infrastructure to drive the needed growth which will position Nigeria in its pride of place on the continent.

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Business

Customs Apapa Command generates revenue of N65.4 billion in April

This indicates a 64% increase in collection and an unprecedented record that has never been achieved in the history of Apapa Area Command.

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Border closure: Amid N5bn daily revenue, Customs officials lament allowance slash  

The Nigerian Customs Service (NCS) Apapa Area Command has announced a revenue of N65,463,398,355.85 for the month of April—an increase of N25,585,561,139.92 compared to the same period last year.

This was disclosed by Comptroller Ibrahim Yusuf, Area Controller of Apapa command, in a press briefing on Thursday.

What Ibrahim Yusuf is saying

“This indicates a 64% increase in collection and an unprecedented record that has never been achieved in the history of Apapa Area Command.

In line with the provision of extant laws, trade guidelines, and enforcement of government fiscal policy measures, the command was able to further strengthen its anti-smuggling operations against economic saboteurs through credible intelligence-driven operations.

READ: Customs revenue rises by N200 billion to hit N1.5 trillion in 2020

This led to the seizure of 4×40 feet containers laden with unregistered pharmaceuticals (674 cartons of tramadol tablets in 225mg and 120mg, and 805 cartons of codeine syrup in 100ml) at APMT and SIFAX 3 bonded terminal respectively.

Other items seized in the period under review include: two containers of unprocessed wood and one container of scrap copper wire,” he said.

He added that the progress the Apapa Command made in the month of April was possible due to the resilience of the officers, citing that the Command had taken steps to ensure efficient revenue collection by creating an enabling environment for legitimate businesses to thrive.

What you should know

Recall Nairametrics reported that the Nigeria Customs Service (NCS) Apapa Command stated earlier that it generated a revenue of N159.58 billion in the first quarter of 2021.

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