For the first time in the history of any capital market in Africa, investors in the Nigerian Capital market are now to get dividend payment within 24 hours through the e-Dividend Payment Platform.
Director General of Securities and Exchange Commission (SEC) Mr Mounir Gwarzo made this disclosure at the e-Dividend Sensitisation Town Hall Meeting in Lagos, South West Nigeria Thursday.
According to him, the proposed system will automatically allow dividends to be credited directly into shareholders’ accounts within 24 hours of payment by the company.
Mr Gwarzo stated that this was one of the initiatives being implemented by the Commission as part of its 10 year Capital Market Master Plan to encourage retail investors to return to the market and thereby deepen the market.
According to him “One of our strategy is to target the retail investor, the only way we can deepen the market and ensure that the market is within our own grip is to ensure that the retail investor comes into the market.
It is only the domestic investor that no matter the condition of the market, will stay with us, what we have been experiencing in the market is the dominance of the foreign investor where anytime they want to move out of the market they get out and anything they want to come in they do so. Seeing what happens in the market, we decided that the best thing it to get the retail investor and our approach is not to go to them and be telling them to come back”.
“But our approach is to identify the issues why they are not in the market and deal with such issues. If you meet any retail investor, he is going to complain about not getting his dividend.
So how do we address some of these issues and that brought about the issue of Road Show where we meet the retail investor’s one on one and tell them why they need to key into the e-dividend it has been quite successful so far”.
“We have achieved something that is very unique, even South Africa they have t+5, when you do transactions you cannot get payment until five days. But with this system, we are going to achieve t+1 settlement system. You sell shares by today, payment are effected within 24 hours which is going to be the first capital Market in Africa. No market in Africa has experienced that before and we are determined to ensure that it is achieved.
He said it was because of the benefits Investors can obtain from e-Dividend registration that is why the Commission decided on embark on the sensitisation Campaign on the need for them to key into the e-Dividend platform by visiting their banks and registrars to complete the process.
The DG assured that once the e-dividend platform is fully operational the issue of stale warrant will be of the past, the issue of travelling from one place to another to deposit the warrant will be a thing of the past; the issue of change of address will also be eliminated.
“The issue of unclaimed dividend which according to our records is in excess of N80billion will also be a thing of the past. These unclaimed dividends came about from dividends of small stakeholders like you and me and we need to ensure that they are claimed.
“The era of proceeds not being remitted for shares sold will be a thing of the past. The e-dividend platform with the use of BVN is what will give us that. Once we register for e-dividend, we will also benefit from the Direct Cash Settlement. Another advantage of the e-dividend is that it will provide a very robust KYC to the operator.
“It is because of lack of KYC that we find a lot of infractions in this market. With the BVN platform which the e-dividend is leveraging on, the KYC will now be very robust. People will not be able to use all sorts of identifications to claim what does not belong to them
Gwarzo emphasised that the only way to attract retail investors back to the market is to ensure that concrete steps are taken to adequately address their concerns.
“We have no other place to invest our little funds than in our market and that is why we are trying to cultivate your appetite and the only way to do that is to address some of these issues.
“The BVN platform that will be provided for the e-Dividend will also enable us to implement other initiatives in the market. For instance with the BVN platform everyone in this market that operates in this market as an investor will have his data within this system, so if anyone wants to defraud in this market, it cannot be done. People cannot impersonate others as the platform will expose them” He added.
In his remarks, the Executive Director Market Operations and Technologies of the Nigeria Stock Exchange (NSE), Ade Bajomo commended SEC in its quest to ensure that every Nigerian that invests in the market gets what is due them in good time.
“The SEC is willing to stand by their reputation. The message is that the market is for all Nigerians and the regulator is putting in the right processes to ensure that investors get what they are entitled to. By this action, the Commission is sensitising Nigerians and the bare going all out to do so in order to grow the market” He said.