Nigeria: Digitalisation of Capital Market to Address Unclaimed Dividends – SEC Assures

The Securities and Exchange Commission (SEC) has announced that the digitisation of the Nigerian capital market will effectively address issues related to unclaimed dividends, among other benefits. Dr. Emomotimi Agama, Director-General of SEC, made this statement during a press conference and stakeholder engagement session on the NGX E-Offering Platform held on Wednesday in Lagos.

In preparation for the bank’s recapitalisation exercise, the Nigerian Exchange Group Plc (NGX Group) is set to launch an E-Offering Platform, pending SEC’s approval. This digital platform aims to revolutionise public offerings and the rights issue process in the Nigerian capital market, offering a more efficient, convenient, and intelligent way to manage public offers.

Dr. Agama highlighted that with the necessary digital payment infrastructure in place, issues associated with unclaimed dividends, such as accessing accurate identity and contact details of beneficiaries, would be fundamentally addressed. He explained the complexities of the financial market infrastructure, including the payment system, depository, exchanges, repository, and other supporting elements.

“Why should there be unclaimed dividends with the E-Offering platform? This is going to help us address that problem. Any issues associated with dividend payments can be managed because we are connected to the payment gateway and have the necessary payment infrastructure in place,” Agama stated.

Describing the new system as akin to a plumbing system in a house, he emphasized the importance of a straight-through process in the capital market. “Previously, we had direct cash settlement as part of the process. Now, we are going to complete it. With the press of a button, everyone entitled to receive a payment will get what they are entitled to without any human intervention. This is digital innovation. That is the future. That’s what we are going to do,” he added.

The director-general asserted that the digital approach would resolve the issue of unclaimed dividends and significantly contribute to the current administration’s goal of achieving a one trillion-dollar economy. According to Agama, leveraging technology can attract a younger generation of investors, enhance regulatory oversight, and create a world-class market.

“This digitisation will play a crucial role in setting a new standard for capital raising in Nigeria and enable the capital market to support the achievement of the one trillion-dollar economy target of the current administration,” he said.

Agama commended the NGX Group and other capital market stakeholders on the initiative and pledged the commission’s support in actualising this feat. He emphasized that the digital transformation initiative is a testament to the shared commitment to fostering an innovative, efficient, and reliable capital market embedded in the capital market master plan.

Mr. Temi Popoola, Group Managing Director of NGX Group, remarked that the e-offering platform marks a pivotal moment in the evolution of the Nigerian capital market. He stated that the platform would distribute financial products, particularly for public offers and rights issues, using an online platform that provides a level playing field for all participants.

Popoola noted that as banks aim to fulfil their revised minimum capital requirements via primary markets, SEC and NGX Group had committed to facilitating a seamless process to help them and other issuers meet their business objectives. This partnership between the SEC and NGX Group represents a major advancement in the modernization of Nigeria’s capital market infrastructure, aiming to improve efficiency, transparency, and accessibility for all participants in the market.

“This innovative platform represents a significant advancement in digitizing the capital raising process for issuers. I can assure the investing public that robust payment systems, comprehensive Know Your Customer (KYC) protocols, and strong fraud and risk management measures are fully integrated on the platform. The e-offering platform ensures that standard capital market intermediation is upheld without compromise,” he added.

According to Popoola, the e-offering platform is designed to increase retail engagement in the capital market, enhance financial inclusion, and expand the available capital pool in line with the transformation goals specified in the updated capital market master plan.