As the Federal Government of Nigeria struggles with declining revenue, it has moved to over the control of more than N895 billion from banks and quoted companies, which represents unclaimed dividends and dormant bank account balances as a special borrowing to fund crisis-related expenditures.
A provision in the Finance Bill 2020 empowers the FG to take over unclaimed dividends and dormant account balances unutilised for more than six years as special credit through the Unclaimed Funds Trust Fund.
The Act states: “From the commencement of this Act, any unclaimed dividend of a public limited liability company quoted on the Nigerian Stock Exchange and any unutilised amounts in a dormant bank account maintained in or by a deposit money bank which has remained unclaimed or unutilised for a period of not less than six years from the date of declaring the dividend or domiciling the funds in a bank account shall be transferred immediately to the Unclaimed Funds Trust Fund:
“Provided that this section shall not apply to official bank accounts owned or belonging to the Federal Government, State Government or Local Government, or any of their Ministries, Departments or Agencies.”
According to data from the National Bureau of Statistics, dormant account balances constituted about 2.5% of total deposits of banks, which stood at N29.5 trillion as at September 30th, 2020.
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Thus, dormant account balances amount to about N737.5 billion. According to the Central Bank of Nigeria (CBN) Guidelines, dormant accounts is any account not operated by the owner for more than one year.
There are 44.5 million dormant bank accounts in Nigeria as at May 2020, according to data from the Nigeria Inter-Bank Settlement System (NIBSS).
The outstanding unclaimed dividends amount to about N158 billion. Combination of both implies that the FG may take over up to N895.5 billion in 2021.
Some banks have said that they were not aware of the inclusion of dormant accounts balances in the Bill according to reports.
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The original version of the Bill did not include dormant account but was limited to Unclaimed Dividends. However, it was reported that dormant account balances were included following a suggestion by a leading legislator during the public hearing on the bill.
President Muhammadu Buhari, in a letter dated 25th November 2020, said the Finance Bill would support the implementation of the 2021 budget through key reforms to specific taxation, customs, excise, fiscal and other laws.
The Finance Bill 2022 was passed by the Senate on 15 December 2020. The Chairman of the Joint Committee, Senator Solomon Adeola, in his presentation, said the Finance Bill 2020 specifically sought to amend 17 key areas.
They are Capital Gains Act; Companies Income Tax Act; Industrial Development (Income Tax Relief) Act; Personal Income Tax Act; Tertiary Trust Fund Act; Customs and Excise Duties Tariff; Value Added Tax Act; Stamp Duties Act; and Electronic Transaction Levy.
Other areas amended are Federal Inland Revenue Service (Establishment) Act; Nigeria Export Processing Zone Authority Act; Oil and Gas Export Processing Zone Act; Crisis Intervention Fund; Unclaimed Funds Trust Fund; Companies and Allied Matters Act, 2020; Fiscal Responsibility Act; and Public Procurement Act.
By: Ifunanya Ikueze