NAIROBI, Kenya, Aug 20 – Financial institutions, insurance firms and listed companies are set to cede billions of shillings they are holding as unclaimed assets following fresh proposals to have the State take over the funds accumulated since independence.
The International Institute for Legal Affairs (ILA), which is involved in crafting the Unclaimed Assets Bill, wants the accumulated funds to be channelled to social development projects.
ILA Executive Director Vincent Kimosop says the funds unaccounted for by their owners should be diverted to the yet to be established Unclaimed Assets Oversight Authority and assist the government in financing its development projects.
“The principal of Bona Vacantia’ requires that ownerless property be managed by the State. What we propose is that money is invested in areas like schools and hospitals as well as projects that are geared towards poverty reduction,” Mr Kimosop said.
Mr Kimosop says in most countries, these assets have been put to positive social and economic good – an illustration is provided by the state of Florida’s system where the funds have been used to fund the public school system.
In Kenya, a corollary would for instance be a Higher Education Loans Board Revolving Fund or the National Aids Control Council for a portion of the funds be used in healthcare provision.
The Taskforce on Unclaimed Financial Assets estimates that close to Sh200 billion remains unaccounted for by their beneficiaries.
Assets ranging from bank deposits to dividend cheques, retirement benefits and, more recently, money held in mobile phone cash transfer services by deceased people often lie unclaimed because there are no laws governing what institutions holding the assets should do.
Banks are reported to hold Sh7.4 billion, listed companies Sh1.5 billion and insurance companies Sh283 million. The National Social Security Fund (NSSF) has reported that Sh243 million in its books that is yet to be claimed.
Lack of laws regulating the management of unclaimed assets has left financial institutions in accounting and operational dilemma.
This had rendered the Ministry of Finance powerless to step in and take control of the assets.
Mr Kimosop however said that the Treasury had option of taking part of the funds and investing in government securities since they are more secure and ensure the funds remain intact should someone eventually claim them.
He said the challenge is many Kenyans die intestate (dying without a legal will) leaving the next of kin with no knowledge of what could rightfully be theirs.
He said the ultimate goal however would be linking people with assets that are lying idle, adding that a lot of public awareness will need to be carried out.
“In the African culture writing wills is like writing a death warrant but that is not the case. Writing one is a simple enumeration of what you have, where and in what quantities and possibly how you would want it to be managed,” he said.