Nigerian govt to borrow money from dormant accounts

Nigerian govt to borrow money from dormant accounts
Zainab Ahmed, Nigeria’s Minister of Finance

 

The Finance Act 2020 recently signed into law by President Muhammadu Buhari has granted the federal Nigerian government now has access to unclaimed dividends and bank account balances unattended to for at least six years as special credit to the federal government through the Unclaimed Funds Trust Fund.

The new Finance Act 2020 which became law has empowered the government as the trust fund will be a sub-fund of the Crisis Intervention Fund.

“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 trust fund,” the act read.

However, official bank accounts owned by the federal government, state government or local governments or any of their ministries, departments or agencies are exempted by the act.

The act also stipulates that, the monies transferred to the trust fund will be a “special debt owed by the federal government to shareholders and dormant bank account holders”.

The original owners of the money can claim it at any time, the Cable reported.

Supervision of the operation of the trust fund will be done by the Debt Management Office (DMO) and governed by a governing council chaired by the finance minister and a co-chairperson from the private sector appointed by the president.

Other members of the governing council shall include the governor of the Central Bank of Nigeria (CBN), director-general of the Securities and Exchange Commission (SEC), managing director of the National Deposit Insurance Corporation (NDIC), a representative of the registrars of companies, two representatives of the shareholders’ association, a representative of the Bankers’ Committee and the director-general of the Debt Management Office as the secretary of the trust fund.

Nigeria owed $31.98 billion to multilateral lenders like the World Bank Group, International Monetary Fund (IMF) and African Development Bank (AfDB) Group as of September 2020, the Debt Management Office said.

This new local source of funds, will make needed funds available to the federal government without foreign exchange worries or conditions attached to loans from multilateral lenders.