President Tinubu has approved the channeling of Nigeria's approximately ₦242 billion in unclaimed dividends, together with eligible cash recoveries by the EFCC, towards funding NELFUND. The move revives a controversial policy first introduced under the Buhari administration, which sought to place unclaimed dividends and dormant bank balances into an Unclaimed Funds Trust Fund that could be utilised by the government while remaining a debt owed to the original beneficiaries.

The Federal Government’s decision to redirect Nigeria’s pool of unclaimed dividends alongside cash recoveries by the Economic and Financial Crimes Commission (EFCC), towards funding the Nigeria Education Loan Fund (NELFund) has reopened one of the Nigerian capital market’s oldest investor-protection debates: who should control money that belongs to shareholders but has remained unclaimed for years?

The announcement is significant, but the most important issue for investors is not simply the size of the ₦242 billion pool. It is understanding what an unclaimed dividend is, what happens to it after years of non-collection, whether the government can use it, and whether the original shareholder can still recover it.

At present, the report provides only the broad presidential directive and says further details will follow. That means the operational mechanics of the proposed diversion, including how the funds will be transferred to NELFund and how shareholder claims will be protected, still require clarification.

What exactly is an unclaimed dividend?

A dividend becomes payable when a listed company declares a distribution to its shareholders.

For example, if an investor owns 10,000 shares in a company that declares a dividend of ₦5 per share, the investor is entitled to ₦50,000.

That money belongs to the shareholder. The fact that the shareholder does not collect it does not ordinarily mean that the company can simply treat it as its own cash.

An unclaimed dividend is therefore a dividend that has been declared and is due to a shareholder but has not been collected or successfully paid to that shareholder.

This can happen for surprisingly ordinary reasons.

An investor may have changed banks without updating his or her records. A dividend may still be attached to an old physical shareholding record. A shareholder may have died and the family may not know about the investment. An investor who bought shares decades ago may have forgotten about them. In other cases, the shareholder's name, bank information, address or other identification details may not match existing records.

Nigeria's historical difficulty with dividend administration was aggravated by the large number of investors who acquired shares during previous market booms, particularly the 2005 banking sector consolidation era, using physical certificates and incomplete records.

The result is a pool of money that belongs to identifiable investors in principle, but cannot easily be matched to active bank accounts.

Why has Nigeria accumulated so much unclaimed dividend?

The problem is not new.

Nigeria's unclaimed dividend balance stood at about ₦158.44 billion in 2019, rose to approximately ₦168 billion in 2020, and reached about ₦177 billion by the end of 2021. BusinessDay reported that the figure had reached about ₦190 billion in 2023 and has now risen to roughly ₦242 billion.

This historical trend demonstrates something important: Nigeria has not solved the underlying problem simply by paying more dividends electronically.

The introduction of e-dividend registration has significantly improved payment efficiency, but millions of historical shareholder records still require reconciliation.

The SEC has therefore invested heavily in its electronic dividend infrastructure. In July 2024, the Commission launched a revamped e-Dividend Mandate Management System (e-DMMS) with a self-service feature that allows investors to mandate their bank accounts electronically without necessarily visiting a registrar or bank. The SEC said the initiative was intended to reduce the growth of unclaimed dividends and improve the investor experience.

A 2025 SEC committee report also stated that approximately 2.5 million shareholders had mandated their accounts through the e-DMMS platform and had their unclaimed dividends paid electronically, showing that digitisation is already unlocking substantial amounts of dormant shareholder wealth.

Yet the aggregate balance continues to be substantial because new dividends continue to be declared while some old records remain unresolved.

From a shareholder's money to a government-administered fund

This is where the issue becomes more complicated.

The treatment of unclaimed dividends has evolved.

Under the traditional framework, dividends constituted debts owed to shareholders and were subject to a statutory period after which certain claims could become barred.

The Finance Act 2020, however, introduced a major change for dividends of public companies quoted on the Nigerian Exchange. It created the Unclaimed Funds Trust Fund (UFTF) and provided that qualifying unclaimed dividends that have remained outstanding for at least six years should be transferred into the fund. The Debt Management Office (DMO) was designated to supervise the fund.

The intention was not necessarily to extinguish the shareholder's claim.

Rather, the money could be moved from the company/registrar environment into a government-administered trust structure. The legislation provided a mechanism through which the government could effectively borrow from the pool, while the underlying obligation to the rightful owner remained.

This distinction matters enormously. Unclaimed does not mean the shareholders have forfeited their rights.

The six-year rule and the 12-year issue

One of the most confusing aspects of Nigeria's dividend regime is the interaction between two concepts: the six-year transfer rule and the historical 12-year limitation.

The Finance Act 2020 provided for qualifying unclaimed dividends to be transferred to the Unclaimed Funds Trust Fund after six years.

At the same time, earlier company-law provisions had dealt with dividends remaining unclaimed for up to 12 years.

The SEC issued a clarification in June 2025 because some companies and registrars were still treating older dividends as automatically "statute-barred" without properly considering the Finance Act 2020.

The Commission stated that dividends that have remained unclaimed for six years or more should be transferred to the UFTF, while shareholders remain entitled to claim dividends that were not already statute-barred before the Finance Act 2020 came into effect. The SEC also stated that, pending full operationalisation of the UFTF under the new legal framework, companies and registrars should continue to honour qualifying claims.

The newer Investments and Securities Act 2025 also explicitly gives the SEC powers to provide for the treatment of unclaimed dividends of public companies, including companies that are defunct or have ceased to exist.

Therefore, the legal architecture has shifted significantly from the old model of simply allowing unclaimed dividends to age indefinitely within registrars' books.

What is different about the latest NELFund directive?

The new development is that the President has directed that the unclaimed-dividend pool be used in connection with financing NELFund.

On the surface, there is a compelling public-interest argument.

Nigeria has a major education-financing challenge. NELFund was established to expand access to tertiary education through student loans and related interventions. Redirecting dormant financial resources into education could allow money that is otherwise sitting unused to support students, human capital development and long-term economic productivity.

The government can therefore argue that it is not simply taking investors' money. Rather, it is putting a dormant pool to productive use while maintaining a mechanism through which legitimate owners can still make claims.

That logic is consistent with the broader rationale behind the UFTF, under which qualifying dormant funds can be mobilised while remaining an obligation of government to the rightful beneficiaries.

But that is only one side of the argument.

The positive case for using unclaimed dividends

The first potential benefit is economic utilisation of idle funds.

₦242 billion is too large to ignore. When capital that has remained dormant for years can be channelled into education, it can theoretically generate social and economic returns instead of sitting in low-productivity accounts.

The second is human-capital development.

Education investment can improve the supply of skilled workers, enhance productivity and support Nigeria's long-term economic growth. In principle, this is a more productive use of dormant capital than simply allowing it to remain unused.

The third possible benefit is fiscal efficiency.

A government facing significant financing pressures can obtain access to a pool of funds without immediately imposing another tax or raising a conventional debt instrument in the market.

There is also an important institutional benefit: the policy could accelerate the development of a properly functioning framework for managing unclaimed assets.

For years, Nigeria has struggled with fragmentation among companies, registrars, banks, the Central Securities Clearing System, regulators and shareholders.

A more centralised system could make it easier for investors to trace and recover dormant dividends.

But there are serious risks

The strongest concern is straightforward:

The money belongs to investors.

An unclaimed dividend is not automatically equivalent to government revenue.

That means any government use of the money must be accompanied by a highly credible mechanism ensuring that an investor who appears tomorrow, next year or several years later can still recover the amount due.

The SEC's 2025 clarification expressly reinforces this principle by describing qualifying transferred dividends as funds held in trust pending claims by shareholders.

The second risk is liquidity and repayment risk.

Once money is redirected into another government programme, the practical question becomes: what happens when a large number of shareholders suddenly come forward to claim their funds?

The government must have sufficient liquidity and a clearly defined repayment mechanism.

A system in which shareholders are repeatedly told that their dividend is "with government" but cannot easily retrieve it would undermine confidence in the capital market.

The third risk is administrative complexity.

Nigeria's existing challenge is not simply that investors do not want their dividends. Many cannot retrieve them because the ownership records are old, incomplete or inconsistent.

Moving the funds from registrars into another institution does not solve that problem.

The fundamental challenge remains identification and payment of the rightful owner.

The fourth risk is investor confidence.

Capital markets depend heavily on trust. Investors must believe that when a company declares a dividend, they can actually receive it.

A policy perceived as government appropriation of private investor funds could discourage some retail investors from participating actively in the market, particularly smaller investors who are less familiar with the mechanics of the UFTF.

The fifth concern is governance and transparency.

Investors should reasonably expect periodic disclosure of how much money has been transferred, how much has been invested or deployed, how much has been claimed, how much remains outstanding and what interest or other earnings accrue to the pool.

Without transparency, the policy could create another layer of opacity around an issue that has already been difficult for investors to understand.

The policy could be positive — if the trust is protected

The most balanced assessment is that the idea of putting dormant capital to productive use is not inherently negative.

Indeed, the existing UFTF framework was created partly to enable such funds to be mobilised.

The real test is whether the government treats the money as borrowed or entrusted capital rather than free government revenue.

That distinction should be visible in the accounting, the legislation, the reporting arrangements and the shareholder-claim process.

The government's use of the money should therefore not become a substitute for solving the underlying unclaimed-dividend problem.

The success of the policy should ultimately be measured not only by how much money NELFund receives, but by whether the number of Nigerians with unresolved dividend claims actually falls.

Why investors should be concerned — but not panic

The announcement should not be interpreted to mean that every Nigerian investor who has failed to collect a dividend has suddenly lost that money.

The SEC's existing framework says shareholders can continue to make claims on qualifying unclaimed dividends, and its 2025 circular specifically directs registrars and public companies to honour applicable claims pending full operationalisation of the UFTF framework.

But the development should serve as a warning.

Investors should not leave their dividend records unattended for years.

The more complicated a shareholder's records become, the more difficult it may eventually be to establish ownership.

And for deceased shareholders, the problem can become even more complicated because recovering the money may require estate documentation, probate or letters of administration and reconciliation of old investment records.

How investors can avoid having dividends become unclaimed

The most important step is to register for e-dividend.

The SEC's e-DMMS enables investors to link their bank accounts to their shareholdings and receive dividends electronically. The Commission provides a self-service mechanism and also allows investors to approach their banks or registrars for assistance.

Investors should also check whether they already have outstanding dividends.

The SEC provides an Unclaimed Dividends Search Portal through which investors can search their names, identify the affected companies and determine the relevant registrars. The SEC's published process then requires investors to obtain the appropriate e-dividend form and submit it through their bank or registrar.

Investors holding old physical share certificates should also consider dematerialising those holdings and ensuring that their records are properly linked to their current investment accounts.

Just as importantly, shareholders should keep their information updated whenever they change banks, names, addresses or other relevant personal details.

Investors should also maintain a simple personal record containing their broker, CSCS details, registrars, shareholdings, dividend history and bank account linked to dividend payments.

For family investments, this becomes particularly important.

Parents who hold shares on behalf of children and families managing inherited investments should ensure that beneficiaries know what assets exist. A substantial amount of Nigeria's unclaimed dividend problem is connected to the death of shareholders and the disappearance of investment information across generations.

Five practical steps every Nigerian shareholder should take

1. Search for existing unclaimed dividends.
Use the SEC's dividend-search facility and verify every registrar attached to your name.

2. Complete e-dividend registration.
Link your eligible shareholdings to an active bank account through the SEC-supported e-DMMS process.

3. Update old investment records.
Make sure your name, bank details, and other identification information are consistent across your broker, CSCS, registrar and bank records.

4. Resolve inherited investments.
Where a shareholder has died, beneficiaries should regularise the estate rather than allowing dividend balances to accumulate indefinitely.

5. Review your portfolio regularly.
Do not assume that receiving dividends from one company means every shareholding is properly mandated. Old holdings, dormant accounts and legacy certificates may still require separate action.

Investors should also understand the difference between dividends and shares

There is a common misconception that once a dividend becomes unclaimed, the shareholder's shares are automatically taken away.

That is not the same thing.

The shareholding represents ownership in the company.

The dividend is a distribution arising from that ownership.

An unclaimed dividend therefore concerns the unpaid distribution, not necessarily the underlying shares.

This distinction is particularly important for investors who bought shares years ago and have stopped monitoring them. Their shares may still exist even when dividend payments have accumulated or gone unclaimed.

What should government do next?

The government's next steps will matter as much as the initial announcement.

First, the authorities should publish clear rules explaining precisely which portion of the ₦242 billion is eligible for transfer and under what legal authority.

Second, government should maintain a publicly accessible reconciliation framework showing the amount transferred into the NELFund-related arrangement, the amount reserved for shareholder claims and the value of claims subsequently paid.

Third, shareholder claims should be processed through a simple digital mechanism, rather than forcing investors through multiple layers of bureaucracy.

Fourth, the authorities should establish clear liquidity safeguards so that legitimate claims can be honoured promptly.

Finally, the government should use the opportunity to intensify investor education.

The long-term solution to unclaimed dividends is not government access to the money.

The long-term solution is preventing the money from becoming unclaimed in the first place.

A bigger capital-market lesson

The N242 billion figure is more than a financial statistic. It is evidence of a structural weakness in Nigeria's capital-market infrastructure.

A healthy securities market should not merely make it easy for companies to raise capital and investors to buy shares. It must also make it easy for investors to receive the economic benefits of ownership.

The rapid development of electronic trading, electronic settlement and digital brokerage has transformed many aspects of the market. Dividend administration needs to progress to the same level.

The fact that approximately 2.5 million shareholders have already had their accounts mandated through the e-DMMS system demonstrates that technology can materially improve the problem.

The policy challenge is therefore to connect the remaining legacy shareholder population to the modern financial system.

Conclusion: The real issue is trust

President Tinubu's directive has potentially important implications for both public finance and the Nigerian capital market.

Putting dormant funds to productive use, particularly in education, can be economically defensible where the underlying legal rights of shareholders are preserved.

But the government must not allow the convenient description of these funds as "unclaimed" to obscure the fact that they still have identifiable private beneficiaries.

The strongest test of the policy will therefore not be how much money is moved to NELFund.

It will be whether a shareholder who discovers an old ₦50,000, ₦500,000 or ₦5 million dividend can still obtain that money easily and without excessive administrative hurdles.

For investors, the lesson is equally clear.

Do not wait for your dividend to become a government-managed asset before taking action.

Register for e-dividend, search for existing unclaimed dividends, update your records, regularise inherited investments and keep track of your shareholdings.

Nigeria may now be finding a new use for its ₦242 billion pool of unclaimed dividends. But for individual investors, the best strategy remains much simpler: make sure your dividends never become unclaimed in the first place.