Billions of shillings belonging to Kenyan investors are sitting idle as authorities seek to change the rules governing unclaimed dividends and shares.

The Unclaimed Financial Assets Authority (UFAA) is proposing sweeping changes that could give companies and SACCOs more time to trace investors before their money is declared abandoned and transferred to the State agency.

At the centre of the proposed reforms is Sh30.5 billion in unclaimed dividends held by companies listed on the Nairobi Securities Exchange (NSE) and SACCOs.

Under the proposed Unclaimed Financial Assets (Amendment) Bill, shares and dividends would only be considered abandoned after five years, up from the current three years.

The extra two years are intended to give companies and SACCOs more time to locate investors whose dividends have gone unpaid because of outdated contact details, uncashed cheques or inactive bank accounts.

The Bill argues that the longer period is necessary because many people invest in shares for both long-term capital gains and regular dividends.

Billions remain stuck

The scale of the problem is striking.

As of June, NSE-listed companies had submitted Sh5.3 billion in unclaimed dividends to UFAA but were still holding more than Sh8.5 billion that had not been claimed.

SACCOs had transferred only Sh160 million to UFAA while retaining about Sh16.5 billion in unclaimed dividends.

The figures highlight a much bigger challenge: finding the rightful owners of money that has effectively disappeared from their financial radar.

So far, UFAA has reunited fewer than 44,693 people with assets worth Sh3.12 billion.

That represents only about 2.5 percent of the unclaimed assets, far below the agency’s target of reuniting owners with 20 percent of the assets.

For many Kenyans, the problem is not necessarily a lack of money, but a lack of awareness that they are owed anything in the first place.

Inheritance disputes have also complicated efforts to identify beneficiaries, while many Kenyans remain reluctant to pursue money through formal legal channels despite the country’s difficult economic environment.

UFAA wants to make penalties less punitive

The proposed reforms also seek to overhaul the penalties imposed on companies that fail to surrender unclaimed assets.

Currently, companies can face a 25 percent penalty on unsurrendered assets, in addition to daily penalties ranging between Sh7,000 and Sh50,000 for every day the assets remain unremitted.

They can also be charged one percent interest every month.

Company executives can face fines of up to Sh1 million and even imprisonment of up to one year.

UFAA argues that the current system has become so punitive that it may actually discourage institutions from voluntarily surrendering unclaimed assets.

The proposed legislation would replace the multiple penalties with a simpler 25 percent penalty based on the value of the identified unclaimed financial assets.

The agency says the simpler system would make compliance easier to calculate and enforce while encouraging companies to hand over the money they are holding.

The hidden fortune in unclaimed shares

The problem extends far beyond dividends.

UFAA currently holds about 2.01 billion unclaimed shares, most of them listed on the Nairobi Securities Exchange.

At prevailing market prices, those shares are valued at approximately Sh85 billion, making shares the largest component of the assets held by the authority.

By June, UFAA was holding total assets worth about Sh126 billion, including Sh41.2 billion in cash.

The agency’s mandate also covers other forgotten financial resources, including valuables left in inactive safety deposit boxes and unpaid salaries and wages that remain unclaimed beyond the legally prescribed period.

The bigger problem could be Sh394.9 billion

Even the billions already sitting with UFAA may represent only a fraction of Kenya’s unclaimed wealth.

A survey conducted by the Kenya Institute for Public Policy Research and Analysis (Kippra) last year estimated that Sh394.9 billion in unclaimed assets was yet to be remitted to UFAA.

Commercial banks accounted for the largest share, with an estimated Sh133.8 billion in unremitted unclaimed wealth.

The manufacturing sector was estimated to hold Sh24.2 billion in unpaid wages, while the judicial system had about Sh6.3 billion in unclaimed cash bail and bonds.

Universities were also estimated to hold approximately Sh8.3 billion in caution money deposited by first-year students.

If approved, the proposed amendments would become the first major changes to the UFAA Act since the agency became operational 12 years ago.

For investors, SACCO members and beneficiaries of forgotten estates, the reforms could determine how much more time they have to reclaim money that has been sitting untouched for years.

And with hundreds of billions of shillings potentially still outside UFAA’s custody, Kenya’s unclaimed-assets problem may be far bigger than most people realise.