Experts suggest prudent management to avoid crisis over unclaimed funds

By Henry Uche, Lagos

Economic, management and administrative experts have affirmed that a proactive and prudent management and administration of human and financial resources by the federal government and its ministries, departments and agencies would go a long way to solve the problem of financial crisis where the government choses to fix such problems with private funds.

A communiqué delivered by Registrar/CEO of Chartered Institute of Secretaries and Administrators of Nigeria (ICSAN) Taiwo Ganiyat Olusesi, FCIS, after ICSAN’s 2021 Company Secretaries and Registrars’ Forum, disclosed that they made this known following the news that the federal government of Nigeria seeks to lay hands on unclaimed dividends and balances in dormant bank accounts as a less expensive, alternative source of financing 2021 budget deficit of over ₦5.6 trillion and other government expenditure.

Since the issue of unclaimed dividends has lingered and government’s plans to use the money, they recommend that, since the Finance Act has been passed and now a binding law, the focus must now be how to minimize the incidences of unclaimed dividends and bank balances by proactively discouraging the practices that breeds accumulation of both unclaimed dividends and dormant balances.

They also maintained that the government must ensure there is transparency, proper disclosure, and due process in the management and administration of the funds to minimize, if not eliminate, the distrust which breeds suspicion and fear on the part of the people, adding that the government must ensure that investors’ confidence is not eroded through opaqueness but rather strengthened by adherence to the highest standards of accountability, prudence, and excellence in the management of the UFTF.

In their words, ‘all stakeholders involved in the management of the Unclaimed Fund Trust Fund (UFTF) must strive to discharge the bounden responsibilities professionally, ethically, and with integrity. Furthermore, they must provide feedback to the Federal Government through the various channels on the outcomes and practical challenges of implementing the Fund.

‘More so, there must be proper channels, well set out and made known to the public to claim dividends once in the government coffers, and notice must be given to concerned investors on recouping their investments.

‘Shareholders should be educated of the various mechanisms, such as SEC’s e-dividend portal to verify the existence of any unclaimed dividends and how the same can be recovered before such funds are due to be transferred to the UFTF. There is also the need for the proper education of many stakeholders on the procedure for the recovery of unclaimed assets under the Finance Act 2020,’ they stressed.

They further avowed that as a corollary to the above, investors should also be encouraged to utilize the E-Dividend-Mandate Management System platform for receiving their dividend payments right from the outset. Likewise, DMBs should intensify efforts to reconnect with and revive dormant bank accounts. They unanimously put forward that ‘a detailed implementation plan for the utilization of the funds should be made public and key performance indicators must be published to enable the public to assess the performance of the fund from time to time.

‘Those implementing UFTF should develop a robust database that is readily accessible by the public. Provision of periodic reports on the utilization of the UFTF funds will increase investor confidence. The UFTF initiative must be enhanced by leveraging various technologies available to the government. Also, technology similar to the SEC e-dividend platforms and those of other countries should be utilized to make the application for refund of unclaimed funds stress-free and reduce the bureaucracy that may be associated with same.

‘Despite the options available, it is also very paramount to maintain investors’ confidence and allay their doubts and fears, hence, the relevant government bodies should engage the investing public more regularly and obtain their feedback on improving the debt funding system and the utilisation of the UFTF. Banks and listed companies should endeavor to entrench a culture of “Know-Your Customers”with proper documentation of their identities and personal details. This will go a long way in addressing the problem of unclaimed dividends and unclaimed balances in dormant accounts at its roots.’

They added that government, through its regulatory agencies like SEC, Central Bank of Nigeria (CBN), etc. should explore the option of linking the Biometric Verification Number (BVN) and National Identity Number (NIN) with the shareholders and depositors’ accounts. This would make it easier for proper identification and tracking.

‘SEC should open the platform for free registration of unclaimed dividends for, at least, another year to enable many investors to recoup their dividends with the efficiency and ease offered by the platform. It is also bounded on Company Secretaries and Registrars to advise their companies on compliance requirements and the need to provide some peer oversight over the DMO in the management of UFTF.

‘When the opportunity of amending the Finance Act comes, the government should think of exploring other options of raising public finance with a less controversial and cumbersome procedure like issuing a bond with a specified interest rate to which unclaimed dividends and money in dormant accounts may be subscribed. This will achieve the dual purpose of raising funds while eliminating all the controversies associated with the UFTF system,’ they stated.