Govt Collected Over Ksh10 million Daily in Unclaimed Cash - Annual Report Shows

Monday, 𝐃𝐞𝐜𝐞𝐦𝐛𝐞𝐫 𝟏6, 𝟐𝟎𝟐𝟒

In today’s money news, unclaimed financial assets in Kenya continue to grow, with Ksh3.8 billion in cash, 407 million shares, and over Ksh3 billion in mobile money deposits surrendered to the Unclaimed Financial Assets Authority (UFAA) in the financial year ending June 2024. Only 6% of these assets have been reunited with rightful owners. The Business Daily reports that mobile money deposits, largely held by Safaricom (96.3%), remain unclaimed due to inactive lines, deceased users, and small, fragmented accounts. Airtel and Telkom hold Ksh114.3 million and Ksh7 million in dormant funds, respectively. UFAA aims to collect Ksh5 billion in cash and 150 million shares in the next financial year, but complex claims processes and challenges in tracing beneficiaries remain significant barriers.

Kenya's top nine listed banks recorded Ksh18 billion in paper gains from government securities in the nine months to September 2024, reversing a Ksh45.3 billion loss from the same period last year. The gains stem from rising bond prices as interest rates, which peaked in August, began to decline following Central Bank of Kenya rate cuts. Banks strategically purchased high-yield bonds during periods of rising rates and are now profiting from selling these securities at a premium as yields drop. Equity Bank leads in holdings, with Ksh231.9 billion in tradable securities, followed by KCB and Co-operative Bank with Ksh124 billion and Ksh82.8 billion, respectively. The Business Daily reports that total bank holdings of government securities rose to Ksh1.28 trillion, driven by increased preference for tradeable securities amid expectations of further rate cuts.

The Capital Business reports that the newly energized 510-kilometer power interconnector linking Kenya’s Isinya substation to Tanzania’s Singida substation is a significant step towards integrating the power grids of both countries. The project, a partnership between KETRACO, Tanzania Electricity Supply Company (TANESCO), and Kenya Power, is part of the Eastern Electricity Highway initiative aimed at facilitating cross-border energy trade. The interconnector improves power system reliability, enables access to cheaper renewable energy, and supports regional economic growth. The Eastern Africa Power Pool (EAPP) is set to begin formal trading in March 2025, with Ethiopia and Tanzania initially trading 100 MW of power through Kenya, increasing to 200 MW in three years.

The Kenya Revenue Authority (KRA) dismissed 25 staff in Q1 2024-25 for corruption, marking a significant increase from seven dismissals in the same period last year. According to the Business Daily,  The purge recovered Ksh549 million in illicit wealth and stemmed from lifestyle audits aimed at curbing revenue leaks. KRA handled 84 disciplinary cases during the quarter, up from 37 the previous year, reflecting its intensified anti-corruption measures. These efforts align with President Ruto’s push to address revenue leakages, which he claims cost the government up to Ksh400 billion annually due to collusion and bribery among KRA staff. Other measures include leveraging technology, such as the Whistle platform for anonymous reporting, and incentivizing informants with rewards of up to 5% of recovered taxes.

Kenya's Capital Markets Authority (CMA) has launched an investigation into the operations of the Commodity Market Exchange (CMX) and its CEO, Jacob Maaga, following complaints from the Zambian Securities and Exchange Commission, which recently suspended CMX’s operations in Lusaka over alleged regulatory breaches. This investigation is part of a broader effort by regulatory bodies within the COMESA region to enforce integrity, transparency, and compliance in financial markets. The move highlights the increasing need for stricter oversight of cross-border financial institutions, aiming to protect investors and maintain the credibility of regional capital markets for sustainable growth and economic integration as reported in the East African.

Companies with loans linked to Treasury bill rates are set to benefit from reduced financing costs as T-bill rates have dropped significantly in recent months as reported in the Business Daily. The 91-day rate fell to 10.03%, the 182-day to 10%, and the 364-day to 11.75%, marking declines of 5 to 6.6 percentage points. These reductions are being passed on by banks to borrowers, easing financial pressure on firms like EABL, Centum, and Crown Paints, whose loans are pegged on T-bill rates or the Central Bank Rate (CBR). This decline is expected to alleviate the impact of high financing costs, which companies have cited as a major challenge in a tough economic environment.

The Public Service Superannuation Fund (PSSF) has diversified its portfolio by investing Ksh2.6 billion in Kenya’s Eurobonds and Ksh3.9 billion in NSE-listed stocks,for the first time. According to the Business Daily, Despite a decline in Eurobond valuations to Ksh2.1 billion due to interest rate changes, NSE investments grew to Ksh4.3 billion, driven by rising stock prices. The fund also increased its holdings in Treasury securities to Ksh125.1 billion and earned Ksh14.05 billion in net investment income, doubling last year’s performance. With contributions from 442,929 members, PSSF's total value rose to Ksh140.2 billion, reflecting its strategy to balance returns and risk.