This archive report was first published on 24 December 2019.
As the Unclaimed Financial Assets Authority (Ufaa) marks six years of existence, it is clear that the entity has made significant progress in collecting unclaimed assets. According to a recent report, private companies and public entities surrendered Sh2 billion more to the fund this year, bringing the total amount surrendered to Sh15 billion. Equity shares held by the authority stand at Sh567 million.
However, the Ufaa's core mandate of reunification seems to be hindered by the slow pace of paying claimants. Only Sh400 million has been paid out, which is a paltry amount compared to the Sh241 billion estimated value of assets held by institutions. The authority's recent efforts to educate the public through chiefs have not yielded significant results.
It is imperative that the Ufaa is insulated from potential abuse by the political elite. The original legal framework introduced a rule stipulating that money from the fund could only be invested in Treasury bills. This move was likely aimed at preventing the misuse of funds for personal gain.
As the Ufaa enters the next five years of existence, it is crucial to review its investment mandate and guidelines to close all loopholes. There are plans to loosen the investment rule and bring other asset classes into the picture, which could introduce new risks. The Ufaa must resist any changes that might compromise its integrity.
Introducing stricter performance criteria for the authority would be a step in the right direction. This would ensure that most of the money is in the hands of the ultimate beneficiaries, aligning with international best practices. The fund could grow into a major source of funds for long-term investments if managed well.
Considering moving the fund to the Retirement Benefits Authority (RBA) framework could also be beneficial. Private sector pension schemes regulated by the RBA are some of the best run in the country, with independent professionals handling administration and oversight.
Ultimately, the Ufaa must prioritize transparency and accountability to prevent potential abuse. A regulator that concentrates on licensing service providers under the Ufaa and a fund dedicated to managing the money would be an ideal setup.
