9 June 2014

Kenya: State Prepares for Billions in Idle Cash

The State's pace to tap tens of billions of financial assets whose owners cannot be traced by the November deadline is gathering momentum after a two-year delay.

Regulations that will guide implementation of the Unclaimed Financial Assets Act 2011 have been approved by the regulatory body in charge, and are now with the Cabinet Secretary for National Treasury Henry Rotich for gazettement.

The Unclaimed Financial Assets Authority's board, chaired by Vincent Kimosop, was appointed on November 16, 2012 but little has been done since due to absence of regulations.

On Friday it advertised for the positions of the top management team including the chief executive. The recruitment drive, whose application deadline is June 20, is also seeking department heads for unclaimed financial assets, legal, audit and risk, finance and accounting, ICT and procurement.

UFAA has been working with staff seconded from the National Treasury including acting chief executive George Omino. Kimosop said the new team will still work with support staff seconded from the National Treasury.

Billions of shillings worth of assets whose owners cannot be traced lie idle in public and private financial institutions and should be surrendered to the State under the law.

Banks, insurers, brokerage firms and mobile money service providers are required to comply with this through special annual reports to UFAA by November each year.

Absence of regulations paralysed receipt of the unclaimed financial assets from companies ready to comply after getting approval from shareholders.

Kimosop yesterday said the regulations, exposed to stakeholders and public from March 4 for input, have been forwarded to CS Rotich for gazetting.

"The process of ensuring all external and internal systems are in place by November is ongoing. We expect all financial institutions to have complied by November," he said on phone yesterday.

He said UFAA will carry out a forensic audit on companies where it has sufficient grounds that they under-declared the value of abandoned financial assets.

While initial estimates had pointed to a figure of around Sh200 billion, UFAA recently said an actuarial study in 2011 projected a value of Sh9.8 billion in unclaimed assets.

The regulations establish an investment fund to hold the surrendered unclaimed cash and a growth fund where earnings from the investments (such as interest income and dividends) will be channelled.

A medium term investment policy as set out in the UFAA Act, Kimosop said, will also be ready by November.

The policy, subject to continuous review in consultation with an appointed actuary, will be implemented by an independent fund manager with a minimum share capital of Sh10 million.

"Let's cross the bridge while we are there," Kimosop said when asked about sectors targeted for initial investments by the fund.


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