e-Dividend Cuts Courier Operators Profit by 30% ..Companies Eye Alternative Windows

Electronic payment of dividends (e-dividends) has dealt a harsh blow on the courier companies with profits nose-diving by as much as 30 per cent as the Nigerian stock market implements the technology initiative, which allows online payment of dividends electronically, into shareholders’ nominated accounts instead of mailing the dividend warrants, Nigeria CommunicationsWeek investigations have shown.
The courier industry is a N100 billion a year business and about 70 per cent of the activities of operators centre on companies’ registrars. The courier companies deliver dividend warrants, share certificates, annual reports and other related documents for the capital and finance market.
Nigeria CommunicationsWeek gathered that it is not business as usual for the courier companies after the discovery that unscrupulous activities of some of them contributed to the mounting incidence of unclaimed dividends, standing at a staggering billion as at December 2007.
The problem was exacerbated by the excesses of some registrars, who declare dividends to the public and their investors, and hold back the cheque.
Sometimes, some companies also manipulate the process when they do not have cash to redeem the warrants.
Elsewhere, companies complain of not getting adequate information from investors to facilitate dividend payments.
On the whole, the drawbacks of the old dividend payment system included: poor logistics management, inadequate update of shareholders’ personal data, inability of investors to maintain regular signature to collect dividends and multiple applications during public offering.
Piqued by growing concerns, Olusegun Obasanjo, former president in 2004, forwarded a bill to the National Assembly, to establish a trust fund.
The idea was for the fund to manage the unclaimed dividend account, but some stakeholders objected saying that could not solve the problem; they feared that fund managers might squander the fund.
Some would rather prefer audit committees of companies to ensure delivery of dividends to respective shareholders.
Nigeria CommunicationsWeek gathered that at a time, the problem appeared to have defied all solutions applied by the Securities and Exchange Commission (SEC) but timely intervention and implementation of e-dividend has managed to stave off what could have amounted to a perennial crisis.
e-dividend replaces the manual issuance of cheques or dividend warrants, which were mailed to the investors, and it touches the major source of revenue to courier companies.
The immediate spin off of the initiative was a sharp drop on the incidence of unclaimed dividends, to N9 billion last year.
The development has also moved courier operators to look for other areas of sustenance rather than depend wholly and entirely on registrars.
The Nigerian courier industry is lucrative but players are exploiting only 20 per cent of the opportunities the industry can afford.