Banks, insurers and telecommunications firms could soon be required to conduct a separate audit report on unclaimed financial assets as the government moves to boost compliance.
The National Treasury has published a draft Unclaimed Financial Assets (UFA) policy which it says will raise the bar of reporting requirements with regard to abandoned assets such as bank deposits.
The move is expected to help Unclaimed Financial Assets Authority (UFAA) to collect more unclaimed assets. The agency had received Sh10 billion of the abandoned assets by last year.
Kenya Power, for instance, had failed to submit cumulative uncollected dividends and other financial assets amounting to Sh1.7 billion in the year ended June 2018.
“The UFAA shall engage relevant accounting bodies, notably Institute of Certified Public Accountants of Kenya (ICPAK), to include audit of UFA as part of statutory/compulsory audit of holding institutions, both public and private,” says Treasury in the draft policy.
ICPAK chairman Julius Mwatu said in the absence of a compulsory audit, UFAA had only instructed ICPAK members to audit specific institutions.
“There were only specific institutions like banks, Safaricom, insurance companies and pension firms, who by nature of their business will always have unclaimed financial assets,” said Mr Mwatu.
“It is not compulsory for all organisations to have a specific audit on unclaimed assets. But the new draft wants to put this in law, meaning whoever will be auditing companies them will also produce separate report on UFA.”
The draft further seeks to seal gaps in the existing law as well as strengthen the capacity of UFAA to recover financial assets. Currently, UFAA’s only office is in Nairobi with no outposts or agents elsewhere in the country.
It further notes that many institutions holding unclaimed assets continue to operate below the envisioned regulatory standards and best industry practices that could have helped reunite such assets with their owners or next of kin.
“This justifies setting and enforcing uniform definitions, accounting and reporting requirements for unclaimed financial assets across all sectors envisaged under this policy,” says the draft policy.
New financial instruments including balances in mobile money and banking innovations as well as in the emerging area of crypto-currencies will also be covered in the proposed law.
Kenya to import mitumba after coronavirus pandemic
Kenya is set to lift the ban on imports of second-hand clothes once the Covid-19 pandemic is over, the Industry, Trade and Co-operatives Cabinet Secretary Betty Maina has said.
The Cabinet Secretary last Wednesday announced an immediate temporary suspension of the importation of second-hand clothes as a measure to stop importing the SARs-Cov-2 virus that causes Covid-19 disease.
Ms Maina said the action taken is in line with the conditions as set out by the Kenya Bureau of Standards (Kebs).
“The government has suspended importation of second-hand clothes with immediate effect to safeguard the health of Kenyans and promote local textiles in the wake of coronavirus,” said Ms Maina.
“Most of the Mitumba imports come from China and Pakistan, countries which are the epicentre of the coronavirus pandemic. The decision is intended to safeguard Kenyans against the spreading of the coronavirus and is therefore a health issue,” she said.
In an interview with the The EastAfrican, Ms Maina said the Kebs will enforce the suspension as we wait for the situation to improve.
“It is a requirement by the Kebs to take such an action in times of an epidemic like the Covid-19,” she said.
A recent study by the US Centres for Disease Control and Prevention shows that the virus can stay longer on different surfaces, including clothes.
Ms Maina, however, said the temporary ban will not in any way affect the policy on Mitumba imports from the US.
Under the African Growth and Opportunity Act, Kenya sold about Ksh40 billion ($400m) worth of textiles and clothing to the US.
“This does not in any way affect our policy on our imports from the US. The decision is strictly an urgent measure to curb the spread of the coronavirus,” added Ms Maina.
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.