By InvestAdvocate

Lagos (INVESTADVOCATE) – Oscar Onyema, Chief Executive Officer (CEO) of the Nigerian Stock Exchange (NSE) has advocated punishment for Companies Quoted on the Nigeria’s Exchange and has in their policy the payment of dividend; but fails to do so.

Onyema said this at a lecture he gave recently at a Public Policy Forum organised by Business Hallmark Newspaper titled “Restoring Market Confidence in an era of Economic Uncertainties: Challenges and Prospects”

Though the NSE CEO said as part of Market recovery Roadmap: Proposed Government backed initiatives; the issue of undue focus on dividends should be addressed.

According to him, there is unusual use of dividends as mark of “good performance”; which prevents investment in fastest growing economic sectors.

“So just because you pay dividend doesn’t mean you are healthy as a Company and so we are proposing that some of these rules needs to be addressed; by the way a Company should be punished if they have a dividend policy that says they would pay dividends; but then they fail to pay dividend; that is different from a Company that says their dividend policy is not to pay dividend; because it is a growth Company and so they want to reinvest all their money into growing their Company” he said.

Onyema affirmed that the Nigerian Capital Market has the highest dividend yield in the Content which is an abnormally.

“I mentioned that we have highest dividend yield in the Continent and it is an abnormally; the reason why it is an abnormally is that if you payout all your earnings in dividends, how do you grow the Company? So there are no Companies that do not pay dividend and get punished for it” he said.

He further affirmed that it is not uncommon in Nigeria to see members of shareholders association fighting the Management for not paying dividends, “so we believe in addressing certain rules, PENCOM for example has a role; if you haven’t been paying dividend for the last three years, PFA’s are not allowed to invest in your company; but PFA’s are the largest Institutional Investors in Nigeria. So just because you pay dividend doesn’t mean you are healthy as a Company and so we are proposing that some of these rules needs to be addressed” he said.