Fakoyejo OlalekanOn July 23, 2021, the Federal High Court in Abeokuta, Ogun state, restrained the Federal Government from accessing shareholders’ unclaimed dividends, but recent event has shown the government is not backing off.
The Senate seem to be laying the groundwork for FG towards its goal to have access to the about N200 billion unclaimed dividends, which rose from N2.09 billion in 1999 when Nigeria returned to democracy, guided by the constitution.
Join our WhatsApp ChannelOn Wednesday, the Senate appointed Umar Yahaya as Co-Chairman, Governing Council of Unclaimed Funds Trust Fund, a unit created by the government to enable it borrow from unclaimed dividends and funds in dormant accounts amounting to N895 billion.
Yahaya’s appointment is the most significant step FG and the lawmakers have taken since the court restrained the government almost a year ago after the Palm Wealth Shareholders Association (PWSA) sued FG over its intention.
What you need to know about Yahaya’s appointment and how it affects shareholders unclaimed dividends?
While Yahaya’s appointment as head of the Unclaimed Funds Trust Fund comes without fanfare, it sends a deeper message to the shareholders that the government is closer to claiming right over the funds than ever.
Recall that President Muhammadu Buhari had included a provision for the Unclaimed dividends in the Finance Act 2020, empowering the government to access the funds without consent from shareholders.
This violates the 1999 Constitution as amended, which confers right on individuals over their moveable and immovable personal properties, that includes their money.
Surprisingly, while the government doesn’t need consent to access the money belonging to Nigerians, the Finance Act 2020 demands that owners of the money must follow a procedure to get approval from head of the Unclaimed Funds Trust Fund – in this case, Umar Yahaya.
This means shareholders need the consent of Yahaya, who is a government appointee , before they can access their own money, and before payment is made to them, the owners must send applications to various registrars for clearance and verification.
The process is seen as a frustrating measure that doesn’t guarantee shareholders access to their money when they need, ““And it will be more difficult if not impossible to recover or claim them since we have to apply to the Chairman of the Unclaimed Dividend Trust Fund, which application has to be referred to the various registrars for clearance and verification before payment will be made to the owner.” The shareholders had said last year.
Prime Business Africa understands the Senate’s decision is a significant step towards finalising requirements to kickstart the Unclaimed Dividend Trust Fund, indicating FG sees the court judgement as a temporary setback, and not the nail on the coffin burying its goal.
FG’s revenue drive threatening investment
The Federal Government’s decision to grant itself access to investment of shareholders comes at a period it is at risk of losing revenue collected on value added tax (VAT) amid debt surpassing total revenue.
Rivers State and other states outside the Northern region had filed a lawsuit to stop FG from collecting VAT from their residents, reserving the right to the states. If the states win, FG will be losing about N1.64 trillion yearly, worsening its revenue problem.
Aside the fact that over N225.93 trillion has been borrowed by the Nigeria government in the last 20 years, surpassing the N114.46 trillion it earned during the same timeframe, couple with International Monetary Fund (IMF) projecting FG will spend 92% of its revenue on debt, the government is scratching every surface to source for revenue.
Eight months ago, Prime Business Africa had reported that federal and subnational governments had borrowed N8.31 trillion from pensioners, representing 63.93% of the N13.001 trillion of total pension assets.
With the pension industry worried about the government’s high borrowing appetite, the Nigerian government is now turning its sight on the unclaimed dividends, as credit continues to dry up in the debt market due to rising inflation – and it seem even the court can’t stop the government.
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