Unclaimed Financial Assets Authority (UFAA) Chairman Richard Kiplagat.
Unclaimed assets have hit Sh54.8 billion, turning the agency into another financial black hole that is aggressively collecting billions of shillings every year but failing to find its owners.
Latest data shows the Unclaimed Financial Assets Authority (Ufaa) is sitting on the billions in idle cash, shares and dividends and is struggling to reconcile the growing haul to its legitimate owners.
Ufaa revealed that it only received 2,315 claims between October and December last year worth Sh270 million.
Since 2014, the authority has received 23,134 claimants seeking Sh1.5 billion as investors, including tycoons, show disinterest in claiming the idle assets.
Kenyans remain disinterested in pursuing funds legally belonging to them or their families despite the tough economic conditions made worse by the coronavirus pandemic.
“Claims amounting to Sh1.5 billion from 23,134 claimants have been received to date. Out of these, 13,940 claims (valued at Sh989 million), 23,920,854 units of shares, 35 safe deposit boxes and 15 Unit Trust have been reunited,” Ufaa said in an email response.
The value of the idle assets grew from Sh50.9 billion in June last year to Sh54.8 billion in December.
The money is largely held by insurance companies, banks, pension schemes, law firms, mobile phone money wallets and Saccos, among others.
The majority of the funds is held in stocks of a billion shares worth Sh30 billion and 9.8 million unit trust portfolios worth Sh55 million.
The Authority is also holding Sh23.1 billion in cash and Sh120 million in foreign currency which it can invest in government securities, meaning the government is the biggest beneficiary of the idle money.
Surrendered safe boxes that are believed to contain jewellery, title deeds, share certificates and Treasury bills rose to 2,949 units from 2,873 in June.
This is a small portion of what is estimated to be held by private and public players mainly because Ufaa has not been able to cover all institutions.
A baseline survey commissioned in 2018 estimated that Sh241 billion in unclaimed financial assets was still unreported to Ufaa by public agencies and private firms.
The report further showed that approximately 477,112 public and private entities hold these assets in their books.
Ufaa recently announced a partnership that will see the auditor general Nancy Gathungu’s office conduct audits on public sector agencies on compliance with unclaimed financial assets reporting and surrender.
Currently, the authority hires private firms and conducts 10 public sector audits each year.
Unclaimed assets include money in bank accounts that have been dormant for more than five years, bankers cheques not cashed and contents in safe deposit boxes unclaimed for more than two years.
Billionaire business owners, former powerful government officials and prominent politicians are on the long list of individuals whose shares have been surrendered to the Treasury.
Reporting and surrender of unclaimed financial assets by all holders is mandatory and is due on or before November 1 every year. Holders are encouraged to file nil returns if applicable.
The law allows Ufaa to charge any entity that fails to surrender unclaimed assets a penalty of 25 percent of the assets held.
Besides, the authority levies a penalty of between Sh7,000 and Sh50,000 for each day that the assets stayed before being submitted.
The law requires the holding company to search for the rightful owners before declaring it unclaimed and forwarding it to the Ufaa.
Most of the unclaimed assets are attributed to failure by the deceased to inform the beneficiaries of the assets besides the absence of a Will.
Wealthy Kenyans are also shying away from claiming the billions of shillings in idle assets surrendered to the State.
The Ufaa reckons it is struggling to link the cash with their rightful owners or beneficiaries, claiming some are being turned off by the worth of assets under the Treasury’s custody. – businessdailyafrica.com
Busses and Matatus at Nairobi Bus Station terminal on September 17, 2021.
Car and home owners defaulted on loans totalling Sh27.8 billion in the 12 months to September last year, giving a peek into the nightmare that the two sectors have become for banks amidst the Covid-19 pandemic.
The Central Bank of Kenya (CBK) quarterly economic review shows the transport sector, which was affected by Covid-19 curbs including curfews and cross-border lockdowns, saw a 60 percent jump in bad loans of Sh16.4 billion from a similar period in 2020.
This is after bad loans rose from Sh27.5 billion in September 2020 to Sh43.9 billion in 2021.
On their part, home owners’ defaults rose by 20 percent or Sh11.5 billion, after the defaults increased from Sh57.7 billion to Sh69.2 billion, as workers servicing mortgages from their pay checks and businesses lost their incomes as a result of the pandemic.
The data showed that the two sectors recorded the highest jumps in defaults and explains why several banks with exposure to real estate and transport have turned to auctioning properties and vehicles as default surged.
“There has been an increase in the number of vehicles and houses being put on auction due to loan distress. This is despite having more auctioneers sharing the business, you might have noticed in the papers there are now very many players,” said CEO Garam auctioneers Joseph Gikonyo.
Mr Gikonyo said despite the surge in the number of properties under distress uptake has been dismal as buyers have also been hit by the ravages of Covid-19.
He said some had also taken a wait-and-see approach, holding off investments in real estate ahead of the August elections.
By September 2020, the sectoral distribution of bad loans showed that trade remained with the biggest stock of bad debt at Sh99.1 billion followed by personal (Sh70.4 billion), manufacturing (Sh65.5 billion) and agriculture (Sh19.6 billion).
The data reflects the impact of Covid-19 pandemic on businesses especially the matatu and taxi operators after the government imposed a night curfew and restrictions on movement into Nairobi, Mombasa and Mandera leading to grounding of some vehicles.
At the height of the pandemic, many motorists turned their private cars into hawking vans as they sought an extra source of income. Some that had commercial cars on loan decided to give them up to lenders after they ran out of funds to repay the loans.
The government also imposed capacity limits on public service vehicles that also pushed some players out of business.
Lenders which had partnered with drivers to finance purchase of Suzuki Altos to operate ride hailing business under Uber Chap Chap were some of the most hit by defaults during the pandemic.
The cars became very popular when Uber introduced the affordable option in 2018, attracting scores of drivers with flexible purchase terms from local banks.
When the pandemic hit and curfews were put in place most drivers could not keep up with payments, resulting in repossession and an increase in auctions.
The Covid-19 pandemic has also hit the home ownership market, sending back property owners to rentals as Kenyans lost their jobs and concentrated on basic needs rather than repaying loans.
Kenya’s mortgage market saw a decrease of 1,022 mortgages or 3.7 percent, mainly due to repayments and fewer loans advanced due to the effects of the Covid-19 pandemic.
There were 26,971 home loans in the market in December 2020, down from 27,993 in December 2019.
The CBK blamed the drop on the impact of Covid-19, high cost of housing units, high cost of land for construction, low level of income and limited access to affordable long-term finance.
Massive job losses in 2020 at the height of the pandemic saw 737,500 workers lose jobs, including those in the informal sector.
Formal jobs in 2020 year contracted for the first time in two decades, with 187,300 positions lost as the economy shrank for the first time since 1992.
This affected borrowers’ ability to repay loans across sector, with gross bad loans increasing to Sh435.7 billion or 13.6 percent of total loans in the third quarter of last year.
The defaults saw a third of Kenyan loan accounts listed at credit reference bureaus (CRBs). TransUnion CRB said 4.6 million loan accounts are currently negatively listed against the total 15 million. – nation.africa.
Times Tower in Nairobi, the headquarters of Kenya Revenue Authority (KRA). Picture taken on Thursday, October 15, 2020.
The taxman netted Sh5.89 billion in the first full year of an amnesty programme that cushions tax cheats from penalties and legal suits.
The Kenya Revenue Authority (KRA) Thursday disclosed that 1,311 firms paid Sh5.76 billion by December 31, with the rest coming from individual taxpayers.
The taxman said firms and individuals declared Sh8.572 billion under the amnesty programme dubbed Voluntary Tax Disclosure Programme (VTDP) in the period under review.
KRA started the three-year programme on January 1, 2021, and is betting on the amnesty to shore up revenue collections and bring more individuals and firms to the tax bracket in the war on evasion.
“Total payments received from the processed applications for the period January – December 2021 amount to Sh5.892 billion,” KRA said in responses to Business Daily yesterday.
KRA documents show that 711 businesses and 600 individuals applied for the amnesty last year with more expected to come forward and declare their unpaid taxes before the programme lapses in 2024.
Under the programme which will run up to 2023, those who declare pending liability and pay within one year shall enjoy 100 per cent interest and penalty waiver.
Businesses and individuals who disclose and pay the pending tax liability within the second year of the programme will receive remission of 50 per cent while payments that come in the third year will have 25 per cent relief.
The taxman targeted Sh5 billion in the first year of the amnesty programme that hopes to entice Kenyans to disclose undeclared taxes for the period between 2015-2020.
Businesses and individuals who are under investigation or who had cases before the tax appeals tribunal or courts before January 1 when the programme started have, however, been locked out of the amnesty window.
Individuals and firms are not eligible to apply for relief under the programme if under audit, compliance verification or investigation.
They will also not be eligible if they have been served with a notice of intention to investigate or carry out an audit or compliance check for the undisclosed tax.
KRA opened the amnesty window a year after its intelligence gathering team revealed some 1,309 firms and wealthy individuals with an estimated tax loss of Sh259 billion, highlighting the dire effects of tax cheats in revenue collection.
VTDP will see businesses and individuals shielded from stiff penalties that include travel bans, collection of duty directly from their suppliers and bankers and prosecution— the penalties for tax evasion.
KRA automated the amnesty programme in July last year allowing tax defaulters seeking reprieve from heavy penalties to apply through the iTax portal.
The automation ended a six-month period of a tedious manual application process that was said to be slowing down efforts to rope in more businesses and individuals.
KRA raised Sh1.67 trillion in the period ended June last year and is banking on the amnesty to collect Sh1.9 trillion in the current financial year.
The amnesty programme marks KRA’s latest onslaught on tax evasion, a war that is pegged on increased intelligence gathering and roping more businesses and individuals into the tax bracket.
High-net individuals whose flashy lifestyles do not match their meagre tax filings and landlords form another key plank in the onslaught on tax evasion.
The taxman is flagging wealthy individuals that have been hiding their sources of income while engaging in luxury spending and accumulation of property, including the purchase of homes and big cars.
KRA has been using various databases to pursue suspected tax cheats, among them bank statements, import records, motor vehicle registration details, Kenya Power records and data from the Kenya Civil Aviation Authority (KCCA), which reveal individuals who own assets such as helicopters.
The taxman is also beefing up the Intelligence and Strategic Operations unit of the KRA— tasked with detecting tax evasion schemes — will get 110 additional staff in the three years to June 2024 in efforts to raid tax cheats. – businessdailyafrica.com
Energy Principal Secretary Gordon Kihalangwa during a media briefing on ongoing reforms in the energy sector, at Kawi House, flanked by sector players on January 21, 2022.