Nigeria Converts N100bn Unclaimed Funds Into Public Debt

By Jennete Ugo Anya

The federal government recorded a N100 billion borrowing sourced from unclaimed dividends and dormant bank accounts, now classified as “Unclaimed Funds Trust Fund Federal Government of Nigeria Security” in the domestic debt stock of the Debt Management Office (DMO). This reflects the conversion of privately owned idle funds into sovereign debt instruments.

DECISION HIGHLIGHT
The policy, enabled by the Finance Act 2020, permits the state to warehouse unclaimed financial assets and deploy them as borrowings, formally recognising them as obligations within public debt.

DECISION MEMO
The integration of unclaimed funds into sovereign financing introduces a hybrid liability structure, legally framed as a perpetual trust yet operationally indistinguishable from conventional domestic borrowing. The DMO positions these funds as part of debt stock, while the Central Bank of Nigeria (CBN) operationalises liquidity management through investment in government securities.

John Onojah, acting Director at the CBN, Financial Policy and Banking Regulation Department, stated that the apex bank will “invest the funds in Nigerian treasury bills and other securities” while ensuring beneficiaries are refunded within defined timelines. This dual mandate, liquidity optimisation and fiduciary restitution, underscores an inherent policy tension.

Criticism reflects concerns over quasi-fiscal appropriation. The Socio-Economic Rights and Accountability Project (SERAP) had earlier challenged the broader plan to utilise up to N895 billion, signalling legal and ethical resistance. Structurally, the policy converts dormant private capital into a low-cost funding buffer for fiscal deficits, effectively expanding the sovereign balance sheet without traditional market signalling.

DATA BOX

• UFTF-linked borrowing: N100bn
• Share of total domestic debt: 0.12%
• Total domestic debt stock: N80.49tn (December 2025)
• Dominant instruments: Federal Government of Nigeria bonds over 79%, Treasury bills about 17%
• Dormancy threshold: 6 years for transfer to fund, 10 years under Central Bank warehousing rules
• Legal status: Perpetual debt obligation to original owners, redeemable on demand

WHO WINS / WHO LOSES
Government gains an alternative liquidity source with minimal immediate servicing pressure. Financial system regulators consolidate oversight of idle assets. Original asset owners face administrative friction and potential delays despite refund guarantees. Capital markets risk reputational dilution, particularly among retail investors sensitive to asset security.

POLICY SIGNALS
The state is expanding fiscal space through administrative financial deepening rather than market expansion. There is a clear tilt towards internal resource mobilisation, even where ownership structures are private but inactive. Regulatory coordination between the CBN and the DMO is tightening around asset capture and deployment.

INVESTOR SIGNAL
The move introduces a latent sovereign claim over dormant private capital, which may influence investor behaviour, particularly dividend reclamation patterns and account activity maintenance. While legally protected, the perception of state encroachment could elevate risk premiums in segments of the domestic equity market.

RISK RADAR
Legal contestation risk remains elevated, especially from civil society actors. Operational risk centres on refund efficiency and record integrity. Reputational risk could affect financial inclusion and investor confidence. Policy creep risk is notable, incremental expansion of eligible funds may occur under fiscal pressure, potentially distorting property rights expectations.