Lamido Yuguda, the Director-General of Nigeriaโs Securities and Exchange Commission (SEC), recently addressed journalists. He discussed the alarming rise of unclaimed dividends to N190 billion.
He attributes this financial issue to identity management problems in the capital market. Multiple subscriptions and name changes have complicated the issue further.
The SEC is implementing reforms to tackle these challenges. One such reform is the introduction of an electronic dividend payment system.
The commission is also enhancing its Know Your Customer (KYC) requirements. The goal is to make unclaimed dividends a thing of the past.
Editorial
The issue of unclaimed dividends reaching N190 billion is a crisis, not just a financial problem. It reveals deeper systemic issues in Nigeriaโs capital market.
SECโs Lamido Yuguda rightly identifies identity management as a core issue. But this isnโt merely a technological problem; itโs fundamentally about trust.
Investors need confidence that their investments are secure. They also need assurance that claiming dividends will be straightforward.
The SECโs introduction of an electronic dividend payment system is a step in the right direction. However, these are reactive measures to a problem that needs a proactive solution.
Regulatory bodies should collaborate with financial institutions and tech companies. The aim should be to develop a unified, secure, and user-friendly identity management system.
Such a system would not only streamline the dividend claiming process but also boost investor confidence. This is crucial for the overall health and growth of the market.
Did You Know?
- The Nigerian capital market is one of the largest in Africa, with a market capitalisation of over $40 billion as of 2021.
- Identity theft is a growing concern globally, costing individuals and businesses billions of dollars annually.
- Blockchain technology is increasingly being considered for secure identity management in financial transactions.
- Unclaimed financial assets are not unique to Nigeria; in the U.S., there is approximately $58 billion in unclaimed financial assets.
- The concept of dividends dates back to the Roman Republic, where โpublicaniโ or tax farmers, would distribute a portion of their earnings to their investors.
