FG’s attempt to take over idle funds

NOT only does the Federal Government’s plan to take over unclaimed dividends of quoted companies amounting to N158.44billion as well as funds in over 45 million dormant accounts in commercial banks leave much to be desired, the reasons advanced for it are patently illogical. Minister of Finance, Budget and National Planning, Zainab Ahmed, who spoke about the plan while providing highlights of the 2020 Finance Act recently, said the move would correct the anomaly in the Companies and Allied Matters Act (CAMA) which provides that shareholders will lose their rights to unclaimed dividends after 12 years.

Pushing further the justification for the planned policy direction, the minister said: “In its place thereof, it is proposed that such unclaimed dividends should be handed over to the government, as trustee, in a perpetual fund created under the supervision of the CBN and DMO etc, with private sector involvement in the governance of the fund. The liability to shareholders will no longer be extinguished after 12 years.” Mrs Ahmed described the government’s position as arising from altruism with the sole intention of protecting the citizenry from being deprived of their money, but she soon betrayed the government’s real agenda when she said the funds could be used to fund infrastructure projects.

There is no doubt that the Federal Government of Nigeria is broke. The government is so broke that the Director General of the Budget Office of the Federation, Ben Akabueze, admitted that a sizeable number of the country’s Ministries, Departments and Agencies (MDAs) may be unable to pay their employees’ November salaries. Hence, the government is busy foraging for funds everywhere. However, we find it extremely difficult to empathise with the government because its current state of illiquidity is self-inflicted. The government’s problem is not paucity of funds; rather, it is the dearth of capacity to manage resources and revenue.

With the resources and revenue available to the government, it has no business being broke. The government has many revenue-generating agencies that make tons and tons of money every month but make despicably insignificant returns to the government coffers without any consequence. An example will suffice. The Department of Petroleum Resources (DPR) was queried early in the year by the Senate for remitting just N44.5 billion into the Consolidated Revenue Fund out of the N2.4 trillion it generated in 2019. Its Head of Planning, Mr. Johnson Ajewole, who stood in for the Director General, Sarki Auwalu, during the enquiry at the Senate, confirmed that the agency actually remitted N44.5 billion out of the N2.4 trillion generated in the year under review.

According to him, the DPR management deducted N88 billion, which is 4 per cent of the sum generated, as the approved collection fee. Imagine that! The agency deducted collection fee despite having staff who are on government payroll. Even at that, the DPR representative could not give any convincing account of what happened to the over N2 trillion balance. The money that could not be accounted for, which he said went into operational cost and overhead, is about half of what the country will borrow to fund the 2021 budget and one-seventh of the whole budget. This is the pattern with many other revenue-generating agencies.

With this trend, how can the government ever have enough funds to cover its cost? If the government has not demonstrated capacity to manage its own funds, there is no guarantee that the unclaimed dividends and the money in dormant accounts would be safe with it. So, rather than looking for ways to rob the citizens through the promulgation of anti-investment policies, the government should stop the leakages in the system, cut down its profligacy and manage the country’s resources and its revenue for the benefit of all Nigerians.

We strongly counsel the government to up its revenue management capacity and beam the searchlight on its revenue-generating agencies with a view to stopping them from misappropriating the nation’s revenue. Until that is done, the government will remain consistently broke and the generality of the populace will remain perpetually pauperized while a few repeatedly smile to the banks.

 

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