Monday, 27 August 2012

Issues in Nigerian economic development

Available information from the Security and Exchange Commission (SEC) has showed that unclaimed dividends in the Nigerian capital market...
UNCLAIMED DIVIDENDS ... stood at N52.2 billion as at December 31 2011. We are worried that the rising wave of unclaimed dividends in the nation's capital market may become another thorny issue that seems to have defied all solutions despite the aggressive drive by the regulators to ensure that dividends payout by companies are received by investors promptly. Presently, Nigerians are not properly educated on what happened to their unclaimed dividends while accounts of failed banks with unclaimed dividends are also not known. To compound this problem, most dividend warrants received by Nigerians (i.e. shareholders) get to them after it has been stalled, making it uncollectable. Recently, DG, SEC attributed the reason for the accumulation of unclaimed dividends to ignorance or when shareholders change their forwarding addresses without informing the companies' registrars thus, failing to receive the dividend warrants. To put an end to this unclaimed dividend "palaver", we canvass, among others, as follows: i. SEC should intensify more efforts at sensitization of the public and corporate organisations on the need to provided current postal addresses and make prompt payment of dividends to shareholders, respectively. ii. Shareholders should be encouraged to subscribe to or embrace the e-dividend payment solution, which all the registrars of companies have put in place. It is a product through which dividends due are credited same day to bank accounts vide electronic means and it is free. iii. The establishment of an Unclaimed Dividend Trust Fund with appropriate legal law to cure the present defects by making it possible for shareholders to recover their dividends however long this may take. This will make it mandatory for companies to hand over unclaimed dividends to SEC for onward transfer into the Fund. iii. The establishment of an Unclaimed Dividend Trust Fund with appropriate legal law to cure the present defects by making it possible for shareholders to recover their dividends however long this may take. This will make it mandatory for companies to hand over unclaimed dividends to SEC for onward transfer into the Fund. MAINTENANCE CULTURE Nigerian all ought to be worried that the extant practice of ensuring an effective maintenance culture has been jettisoned by Governments and the citizens over the years. In the past, remember the Public Works Department (PWD) and Citizens carrying out regular maintenance of public roads and private infrastructural facilities. This often increases the life span of such facilities/properties and reduces accidents and down time/depreciation of equipment. However, we are all witnesses in today's society that the spirit of proper maintenance culture has disappeared from both public and private sector levels in the country. This has led to the fast deterioration of infrastructural facilities/properties throughout the country, resulting in high maintenance or replacement costs. We would canvass the need for Government and her agencies also the citizens alike to revert to the extant culture by taking very seriously the issue of proper and regular maintenance of infrastructural facilities/properties in the country. Doing so will release substantial funds hitherto committed to frequent development of new infrastructural facilities/properties, thus, aiding' improved and sustainable growth of the economy. Maintenance will also create peace of mind, wealth and jobs. UTILITIES AND PRIVATISED COMPANIES BY BUREAU OF PUBLIC ENTERPRISES (BPE) We are excited and welcome a recent pronouncement credited to the Honourable Minister of Power as saying that the Power Holding Company of Nigeria (PHCN) will be listed on the Stock Exchange market. This is a commendable development that will enhance service delivery to the citizens if ownership of most public utilities is taken to the capital market. We, therefore, wish to recommend that all public utilities in the country should be privatised to ensure better operational efficiency, in line with private sector-led policy. We believe that the listing of public utilities on the Stock Exchange will be complimented by Government through the provision of appropriate business-friendly incentives and infrastructural support to encourage private sector operators to grow and thrive. We have also observed that BPE has granted a number of leases and concessions to some organizations in the country in recent past. We believe most of these leases and concessions have been successful, however some have failed woefully and immediate review is better late than never. We recommend that BPE should re-examine and review all the failed leases and concessions granted, with a view to determining the gray areas and revoke those that are not performing. This has become necessary in order to ensure that such leases and concessions are only granted to credible leasees and concessioneers so that such privatized companies do not become problematic and further constrain growth of the economy. DIFFICULTY IN ACCESS TO FUNDS BY SMEs/SMls We are worried that access to funding is still a recurring mirage to many real sector business operators and service providers in the country. This has made it difficult for most business operators to become self employed, thrive and create jobs. The atmosphere is still not right as some SMEs/SMls that were able to borrow funds from banks end up defaulting with repayments. The poor access to funds and high default rates on repayments has continued to put fears in the minds of young entrepreneurs, thus, dissuading them from venturing into viable business and becoming risk averters. To ameliorate this problem, which has become endemic and posed growth challenge to the business community, we wish to suggest that the bottlenecks to accessing funds by business operators in the country should be examined and appropriate remedy to ease the problem fashioned out by CBN. Government should also intensify her support to businesses by fast-tracking a sort of special intervention policy fund to woo investors and entrepreneurs. The enabling environment should also be laid for businesses to take advantage of the recent non-interest banking facility in the country. We recommend the need for induction and training for business operators and service providers on how best to access funds with ease. The Chambers of Commerce will be willing to organize such induction and training for businesses with the support of our Development Partners. INTEREST RATE AND SAVINGS We are concerned that the issue of low savings interest rate given by banks to their customers for money deposited is yet to be addressed as desired in the country. This has continued to discourage the savings habit by citizens, especially illiterates, most of whom prefer to patronize local money collectors (i.e. Alajos in Yoruba) to save their excess funds or rather keep it in their bedroom at homes. This practice definitely tends to reduce the quantum of funds available for on-lending by banks to investors/businesses, thereby, slowing productivity and growth process in the economy. To address this problem, we wish to advice that the CBN should, as a matter of urgency, through its Monetary Policy Committee narrow the present wide margin between the savings and the lending rates charged by banks in the country. This has become necessary in order to restore confidence and stability in our monetary system, which will invariably increase savings habits and deposits, increase available loanable funds for investment and improve the economy. The payment of a reasonable interest on savings vis-a-vis lending rates by banks will also encourage Nigerians in Diaspora to consider it wise to repatriate their excess money back home for investment purposes that will lead to the growth and prosperity of our country rather than continue to keep it abroad. We, therefore, advice that Government should put in place a deliberate policy that encourages remittances of money home back home by Nigerians in Diaspora. "ILLEGAL" REFINERIES TURN-AROUND TO "LEGAL" REFINERIES We have watched with dismay the continuous destruction of small refineries classified by Government as illegal in the country. We believe that the action of Government/Ministry of Petroleum Resource is not the best given the current problem confronting the country in the petroleum sector; as it would further compound the sector's supply chain of petroleum products. We believe that the Ministry of Petroleum Resources (MPR) rather than continue to destroy these illegal refineries should carry along these illegal and stubborn stakeholders/operators involved and come up with regulations spelling out the criteria to make such illegal refineries become legal. To ensure strict compliance and standards to the laid down criteria by the operators of the small (but now legal) refineries, there is need for the Department of Petroleum Resource (DPR) to assume effective supervisory role. ENCOURAGING MODERN INDUSTRIALISATION The age of using incandescent light bulbs is fast disappearing over globally. Some countries (Malaysia, Australia, Philippines, China, New Zealand, India, Canada, Cuba, Argentina, European Union, etc), have banned or planning to ban the importation or propose a quota for the importation, sale and use of incandescent bulbs in their countries and have put in motion machinery of producing/using of energy saving LED light and Tubes of 30 Watts maximum to replace the conventional light bulbs, so as to gain substantial energy savings. We consider this as a development to emulate and to take a cue from, since it will reduce drastically the cost and consumption associated with energy usage by the citizens and businesses alike. We wish to advise that to align with the current global trend the National Assembly should consider to immediately put in place appropriate legislation that discourages the' use of incandescent bulbs and encourages the manufacture of LED light and Tubes by Nigerians to conserve energy and consumption costs in the country. 

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