When in 2015 the Securities and Exchange Commission launched its e-dividend platform, the Electronic Dividend Mandate Management System (E-DMMS), many Nigerians, particularly shareholders, were euphoric and commended the initiative.

Their reaction stemmed from the belief that sooner rather than later, the process of dividend payment will become streamlined and robust, allowing for speedy and easy access to declared cash and bonus dividends. With the new process in place, they hoped, the incidence of unclaimed dividends is expected to be solved permanently.

Shareholders were right to be euphoric. The SEC Director-General, Mounir Gwarzo, while unveiling the e-dividend platform in Lagos, had assured that “the era of stale dividends and huge unclaimed dividends in the market will be a thing of the past with the launch of e-dividend payment platform,” even as he expressed the determination to see to the “full implementation of the system to facilitate effective payment of dividends to investors.”

Indeed, the platform, among other benefits, was expected to help shareholders have direct access to their dividends devoid of the time-consuming and often costly process that characterises payments and receipt of dividends; it was also expected to reduce the incidence of unclaimed dividends, which, according to SEC, was in excess of N80 billion at the time of the launch; reduce the financial burden of dividend payments on registrars and the companies that incur costs in printing of warrants, postage, etc.; and allow investors to enjoy the Direct Cash Settlement module, whereby proceeds of share sales are paid directly into an investor’s account as against the old practice of routing payment via stockbrokers.

To underscore the importance and urgency of the switch to e-dividend, SEC had made registration free and Gwarzo had placed a 90-day timeline on free registration.

“We have agreed with all stakeholders that for the first 90 days, the registration on the platform would be free, subsequent to which registration would attract a fee of N100,” Gwarzo had said. The reasoning behind the 90-day free registration was the expectation that shareholders will take advantage of the window and register en masse.

No doubt, SEC deserves all the commendations for addressing the unclaimed dividend issue through the introduction of e-dividend.

Simplifying the dividend payment and collection process is truly a huge step in reducing the challenge of unclaimed dividend. The joy of equity investment is the ability to partake in a company’s profit via cash dividend.

Unfortunately, for far too long that has remained a problem for investors at the Nigerian stock market. The cumbersome dividend payment and receipt process has ensured a pile up of unclaimed dividends.

Considering the old costly system, one would expect that investors would rush to take advantage of the free registration period to get their dividend issues sorted out. That did not happen.

To ensure uptake, SEC began an e-dividend registration sensitisation campaign in January 2016, starting from Abuja to Lagos and Kaduna, and to move to other locations across the country. The campaign consists of road shows and town hall meetings.
The campaign has also not had the expected impact.

At the Q1 Post Capital Market Committee Meeting briefing in Lagos recently, Gwarzo revealed that only about 4,000 plus investors had so far registered in the five months since the sensitisation campaign broke.

It is no doubt a poor response considering that there are over four million investors in the market. SEC recently announced an extension of the free registration period by 150 days and promised to bear the cost of registration on behalf of investors who take advantage within that period.

Many wonder at the lukewarm response to an initiative that is clearly laudable and would be of benefit to investors.

A recent report by a national daily seemed to suggest sabotage.

According to the report, “SEC has evidence that some banks were charging as high as N1,050 to stamp and sign the e-dividend forms…” If the report is true, then the banks’ motives must be called to question. Gwarzo had talked about an agreement on free registration.

“We have agreed with all stakeholders,” including banks, no doubt, for registration to be free to ensure mass uptake.” The report equally indicted registrars, who are said to have been feeding fat from the old arrangement and are reluctant to let go.

In truth, such double-faced practice could easily derail the exercise and should not be condoned. If one has committed to doing something, integrity demands that it be carried through until a new arrangement is arrived at.

Banking demands the highest level of integrity and bankers have a moral duty to live by that standard. If they “agreed” to make registration free, then it has to be so.

However, that is half the story. It does appear that much as the SEC has done, it would need to do more or tweak its strategy a little to achieve better uptake.

Perhaps, Sir Sunny Nwosu, National Co-ordinator, Independent Shareholders Association of Nigeria (ISAN), was right when he said the e-dividend policy is “still elitist to some shareholders” as they view “certificate as the only official evidence of having shares” much the same way they view paper warrant as evidence of payment.

A way around that is investor education and more education. It surely would help if SEC could identify some well known local investors, not shareholder group leaders like Nwosu, Boniface Okezie or Alhaji Gbadebo Olatokunbo, but ordinary shareholders that they could use as advocates or ambassadors.

What that does is that many skeptical investors may become convinced if a peer is the one giving his/her testimony of what e-dividend has done for him and not some leader or officious looking figure telling them what e-dividend can do for them.

The SEC can also work more closely with shareholders groups to boost e-dividend sign-on rate. Surely, the groups have a comprehensive register of members that SEC could exploit to ensure all members are e-dividend compliant. What SEC needs to do is to ensure, working with the groups’ leadership, that all members who have not registered are identified, provided with the forms and encouraged to complete and submit.

Stockbrokers are another portent group to exploit, since all equity investors must pass through a broker. Like shareholder groups, stockbrokers have a database of clients that could be exploited. The brokers can be encouraged to analyse their databases and identify clients that are not e-dividend compliant. These individuals could then be specifically targeted by the brokers to ensure they register.

Annual general meetings are another avenue for mass registration. Companies and their registrars could be encouraged to dedicate a table or section of the hall where the AGM is held for a fast tracked e-dividend registration. The AGM season is here and if this is planned right, a great number of investors could be registered in no time.

The e-dividend initiative may be stuttering, but there is no doubt that once it gathers steam, investors will enjoy an easy ride in terms of instant access to declared dividends, market transparency, confidence and invariably, better participation in equity trading.

– Blessing Ikeme