President Muhammadu Buhari signed the 2020 Finance Act on December 31, 2020. The Act took effect January 1, 2021. Now the Buhari administration has perfected ways to borrow funds from unclaimed dividends and dormant bank account balances unattended for at least six years.
Nigeria had perpetually grappled with the twin problems of heavy budget deficits and weak balance of payments. What is the guarantee that the incoming administration in the next two years and the subsequent ones will have the capacity to repay Nigeria’s debt that has reached a scary situation where total debt stock stood at some humongous rise to N31. 009 trillion ($85.897 billion). From every economic indexes that if the country keeps borrowing, and our debt increases beyond accepted level, and our growing share of GDP now needs to go into debt servicing or repayments, it may start to take the tax revenue that is needed for development. We have seen nations, especially developing ones like ours, suffer severely from such bloated debt burden, which means struggling to meet even the debt interest payments with nothing left to develop.
Now, the Finance Act took effect from January 1, 2021. Despite huge debt by the country, why does the federal government intend to go after the money in dormant account balances which is about N737.5 billion? When added with the N158 billion outstanding unclaimed dividends, the total amount of money that would be taken over by the federal government may be up to N895.5 billion.
However, the minister of finance allayed fears of owners of dormant accounts and unclaimed dividends. She stated, “They have nothing to lose as they would be paid their entitlements from the Special Trust Fund to be set up by the federal government once they are properly identified. How sure are the owners of the unclaimed fund that they will access the fund, considering bureaucratic bottlenecks in the country? The system is too inefficient and will not help the claimant to access his unclaimed dividend unless the problems are solved.
It will be stressful for an owner to request for returns of his fund. To be fair, how can a shareholder with an unclaimed dividend of about N10,000 be expected to go to Abuja just to make a claim of the unpaid dividend?
The shareholders had opposed the idea, saying the government lacks powers to manage funds belonging to private sector investors. In spite of the extant law before this Financial Act clearly states that there shall be no forceful takeover of any private movable property of any Nigerian without due and appropriate compensation and or valid court order. In view of the guaranteed rights to own property as provided by the Nigerian constitution, this move was unnecessary because capital market regulators and operators had leveraged technology to put in place initiatives that are already addressing the issue.
Almost every day, concerned Nigerians and economic experts express worries over the country’s rising debt profile. Even in the 2021 budget over N3.3trillion will go to debt servicing. The federal government has disclosed how it plans to sell and concession government’s owned properties and non-oil assets to fund the 2021 budget.
One may be surprised about the speed with which leaders at all levels go for questionable bonds while legislators were preoccupied with determining their immediate benefits with unnecessary and conventional allowances which took no account of the state of the economy and the welfare of the people they represent. Nigerians current concern, however, is who will pay these huge debts? Really, not us and also too weighty for the lean shoulders of our children. Will our children not be turned to slaves in their own country by the creditor nations, just because they want to pay off the debts left by the frivolous political class that have ravaged our common patrimony?
Dukawa writes from Kano via [email protected]