Investment Brokers on the Trading floor of the Nairobi Securities
Exchange (NSE) in Nairobi on September 12, 2014. Many investors in
stocks die intestate making it difficult for their loved ones to claim
them. PHOTO | SALATON NJAU | NATION MEDIA GROUP
Joe Ngige’s father died in June 1991. After going through the
mourning and estate administration procedure, life returned to normal.
And
then, a few years later, his brother stumbled upon a banker’s debit
note instructing the bank to pay a policy premium for their father.
The brothers contacted the insurance company and after the necessary get-to-know-you, the policy was paid without undue delay.
But
a curious Ngige asked himself why the insurance company had not
contacted the family? The answer: Change of address. The old man had
used his job address and as he moved through the various stages of his
life, he forgot to update the address.
In that
instance, Ngige’s mind flooded with thoughts of other unclaimed assets –
dormant bank accounts, unclaimed dividends, etc. There and then, he and
a friend registered the Unclaimed Property Assets Register (K) Ltd, of
which he is the Chief Executive Officer.
What, he
wondered, happens to those families whose breadwinners invested well but
do not know how to start tracking their financial assets upon death.
Ngige
embarked on a journey of discovery. He came upon many stories, but the
following one will no doubt open the eyes of an untold number of Kenyans
struggling hard to stay alive today.
As part of his
research, Ngige went to a top financial institution and sought samples
of dividends returned as unclaimed from the Post Office to which they
had been sent.
ORIGINAL OWNER
In
this case, the original owner of some company shares was a colonial
farmer in Eldoret who, upon his return to England, bequeathed them to
one of his servants.
Not knowing what shares were, and
much less the company in which he was now a part owner, this new
shareholder simply placed the share certificate in his suitcase together
with old letters and other documents.
When he died,
his family moved back to their ancestral home in Karatina, Nyeri County,
where they resigned themselves to a squalid life. Ngige was able to
trace the dead man’s son through the local assistant chief.
It
took a great deal of persuasion by the assistant chief to convince the
elderly man of the authenticity of Ngige’s story. When it was made clear
that no money would be required of him and that his bus fare would be
paid, he agreed to go to Nairobi in the company of his son to claim his
shares.
Says Ngige: “The man found that the shares
were, through various splits and accumulated dividends, now worth Sh12
million. His life and that of his family changed instantly. Because of
this inheritance their housing improved, and they have invested in dairy
and other income-generating projects. Even the lives of their
neighbours have changed.”
Using this story as an
example, Ngige advises Kenyans: “People who believe their forebears
invested in banks, shares or other assets should make use of the
Unclaimed Financial Assets Authority (UFAA) to trace investments that
might have been made.
They should take advantage of
this initiative to ensure that their family wealth gets to the second,
third and fourth generations.”
In 2008, a survey by a government task force put the value of unclaimed assets in Kenya at Sh9.1 billion.
But it added a rider that this figure was far below the reality on the ground. It attributed this to a number of factors.
The
main ones were exclusion of non-financial assets such as land and
property, significant under-reporting by the holding institutions
surveyed — particularly in the pensions and insurance sectors — and
non-reporting of unclaimed assets by government agencies such as the
Public Trustee. Most significantly, mobile phone money transfer
providers, who have since become major players in the banking sector,
were also not included.
UNCLAIMED ASSETS
Unclaimed assets that featured in the report were mainly in the banking, insurance and capital market sectors.
Of
this total, banks reported Sh7.4 billion, listed companies, Sh1.5
billion, insurance companies, Sh283 million while the National Social
Security Fund (NSSF), which falls within the pensions category, reported
Sh243 million.
The Kenya Power and Lighting Company (KPLC), which was categorised within utility firms, reported a total of Sh66.8 million.
This comes mainly from customers who do not claim their electricity deposits on closing their accounts.
On
October 31, 2014, the UFAA, which came into force by an Act of
Parliament in 2011, published a notice requiring all the holders of
unclaimed assets to fall into line with the law and surrender such
assets to the authority.
Quoting Section 20 of the
UFAA Act, the authority’s notice prescribed the manner in which such
assets would be surrendered to its account at the Central Bank of Kenya.
Mr
Vincent Kimosop, the UFAA chairman, says that six commercial banks have
already complied with the notice. They are Prime Bank Ltd, Fidelity
Commercial Bank Ltd, Oriental Commercial Bank Ltd, UBA Kenya Bank Ltd,
Standard Chartered Bank Ltd and Victoria Commercial Bank Ltd. In the
insurance sector, the Kenya National Assurance Company (2001) has
complied.
Says Mr Kimosop: “It is in their interest to comply with the Act, since by doing so, they are also serving their clients.”
Many
Kenyans don’t know what their government classifies as unclaimed
assets. They also do not know after what period an asset becomes
unclaimed.
TRACE ASSETS
They are thus poorly positioned to make a claim on what is rightfully theirs.
Mr
Kimosop says public education would form a core activity of the UFAA,
whose entire mandate is to trace such assets on their behalf and keep
them in trust and finally pass them on to their rightful owners.
Where this cannot happen, for whatever reason, the mandate of the authority is to invest them for the public good.
It
is a monumental task in a country famous across the world for
corruption. Mr Kimosop is aware of the task ahead and remarks: “Not
every Kenyan is corrupt.
“Not all the institutions are
riddled with corruption. It is possible to serve the public without
pursuing self interests. Mr Kimosop, who is the CEO of the International
Institute for Legislative Affairs (ILA), previously worked at
Transparency International (Kenya).
The
secretary-general of the Consumers Federation of Kenya, Mr Stephen
Mutoro accused financial institutions of profiting on the back of
unclaimed funds instead of surrendering them to claimants.
“It
is legally and morally wrong for banks and other financial institutions
to continue holding assets that belong to deceased persons.
It
is a criminal act for such institutions to use the funds to re-invest
and even declare profits while they make it impossible for the next of
kin to access the funds.”
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