By Our Editors
There is simmering disquiet in the polity since speculations became rife that the federal government has plans to borrow from funds which accumulated in financial circles as a result of unclaimed dividends as well as in dormant accounts of deposit money banks. Available records indicate that funds from these two sources amount to about N895 billion. A huge sum indeed.
Provisions of the Finance Act of 2020, created what is known as Unclaimed Funds Trust Fund, a special trust fund where all unclaimed dividends and funds in dormant accounts are to be transferred to as borrowed funds for government use.
According to Section 77, 1-3 of the Act, “From the commencement of this Act, any unclaimed dividend of a public limited liability company quoted on the Nigerian Stock Exchange and any unutilized amounts in a dormant bank account maintained in or by a deposit money bank which has remained unclaimed or unutilized for a period of not less than six years from the date of declaring the dividend or domiciling the funds in a bank account shall be transferred immediately to the Unclaimed Funds Trust Fund.”
The initial reaction in the public sphere is that this plan by government is proof of how broke and heavily indebted the country is.
With a total public debt stock of N32.22 trillion as at September 30, 2020 out of which N12.19 trillion or 37.82 per cent is external, it is almost difficult to think that the country would still have the courage to approach any foreign lender for more loans.
Official sources indicate that $16.74 billion of Nigeria’s foreign debt is multilateral; $502.38 million bilateral (AFD) and another $3.26 billion bilateral from the Exim Bank of China, JICA, India, and KFW while $11.17bn is commercial which are Eurobonds and Diaspora Bonds.
The nation spent a quarter of its 2020 budget amounting to N2.5 trillion on debt servicing and also budgets to spend a quarter of the N13.6 trillion budgeted for 2021 — N3.3 trillion on debt servicing.
All these put together explains why the government is becoming seemingly desperate. However, this newspaper feels for the authorities in their frustration which is compounded by the second wave of COVID-19 and the dwindling price of crude oil, the nation’s main source of foreign exchange earnings.
The anxiety in the public space over this plan to put to use this supposedly idle fund derives from past experiences regarding an obvious lack of discipline in the application of resources by government, at all levels, and their agencies. Were Nigeria to be another country, this proposal from government would have drawn applause from the people.
What is the essence of leaving the unclaimed dividends and funds in dormant accounts lying idle when they can be better utilized for public good?
But this, in reality, is Nigeria and the case is different. Different in the sense that politicians have not left the rest us with any reason to trust them with funds especially when there are no clear-cut conditions for the repayment of such funds.
We do believe the government has a case in trying to borrow from dormant funds. What we are not comfortable with is that the government has not spelt out clearly the modalities for repayment to their due owners if and when they emerge and has also not given assurance that the funds will be ploughed into specific projects so that the people can measure their utilization and beneficials.
Again, the government has also not exhausted all options available for it to generate revenue from other unexplored and unexploited sources.
In our considered opinion, it appears contradictory that the government which claims to empower local industries, is at the same time reducing duty on imported vehicles and removing Value Added Tax (VAT) from aviation services.
Rather than going the way it has chosen, the federal government ought to have put mechanisms in place to get the unclaimed dividends and funds in dormant accounts to their owners or their family members if they are dead.
It is common knowledge that banks deliberately make it difficult for family of deceased customers to have access to their accounts. And the reason is not far to seek- the dead do not bite.
We are persuaded to argue that as a way of getting over this so called unclaimed funds, company registrars should make extra effort to trace the owners of unclaimed dividends as banks trace the owners of dormant accounts.
All said, we are of the view that the government has not exhausted its revenue sources. The solid minerals are there waiting for exploitation just as foreigners and their local collaborators are illegally making a kill out of them unhindered.
Experts fear that the policy will dampen investors’ confidence and create capital flight. These are two consequences the nation can ill – afford at this critical point in time.