A new audit has castigated the Unclaimed Financial Assets Authority for not performing its crucial role of unifying dormant assets to the beneficiaries effectively and efficiently.
Auditor General Nancy Gathungu has said the authority is not meeting its mandate of tracing unclaimed assets and reunifying them with beneficiaries.
“The authority is not meeting its mandate efficiently and effectively…my opinion is not modified in respect of this matter,” she said in a review of UFAA books as of June 30, 2022.
This followed the auditor’s findings then that of the Sh22.6 billion that was received from holders, only Sh604 million worth of claims had been paid.
“This represented a reunification rate of three per cent of total assets remitted by holders,” Gathungu said.
According to the figures on the UFAA website, the amount has since increased to Sh62.34 billion, of which only Sh2.03 billion has been paid.
“Millions of Kenyans are yet to claim Sh50 billion worth of cash and other unclaimed financial assets. You might be one of them,” the authority says in a campaign to have more beneficiaries turn up to make claims.
UFAA started receiving unclaimed assets from various portfolio holders in 2014, but the reunification with the beneficiaries started in 2016.
Concerns are rife, however, about not only the pace at which the claims were being processed and paid but also the low claims rate by the beneficiaries.
UFAA managers said several factors, including internal, explain the slow pace of reunification.
Top of the concerns is that the authority suffers an excruciating staff shortage in the face of its mountainous responsibility.
“As of June 30, 2022, the authority had 32 staff that also doubles up as the fund’s staff to handle operations countrywide,” Gathungu said.
UFAA also cited challenges with the law, which discourages low-value claims due to cost implications.
The “non-differentiated claim” process is said to hinder the effective transfer of assets to the intended beneficiaries.
The authority blamed a regulatory regime “that prescribes forms which favour physical delivery of documents by claimants”.
The forms and associated documents are processed manually, hence slowing down the claims process.
Managers at the John Mwangi-led fund also raised concerns about the nature of unclaimed assets “where tracing and location of rightful owners takes time”.
It further cited low awareness levels among beneficiaries and “many receipts of very small amounts without any provision or mechanism to donate”.
“The above factors do not adequately support an effective reunification process,” Gathungu said.
UFAA managers have indicated the authority has proposed and adopted several measures to address low reunification.
Among the measures, the authority says, included automating the claims process, devolving the reunification services to the grassroots – Huduma Centres and incentivising holders.
“In line with the growth strategy envisioned in the Strategic Plan 2018-2023, the authority has embarked on growing the fund and ensuring enhanced reunification of assets with their rightful owners,” UFAA chairman Francis Njenga said in notes to auditors.
Press reports showed UFAA saying claims of as high as Sh32 billion were in small denominations of under Sh5,000.
The authority says such claims, compared with their value and cost of tracing, are expensive to process.
Gathungu further queried the absence of an information technology steering committee at the authority.
It has emerged that management did not have the committee to assist in the development of the ICT policy framework.
“This may result in an unclear direction regarding maintenance of information security across the authority and safeguarding the authority’s assets,” Gathungu said.
“In the circumstance, the existence of IT strategy to ensure that the authority’s strategy is achieved couldn’t be confirmed."
