Unclaimed Financial Assets and Financial Performance of Telecommunication Industry in Kenya
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Date
2021
Authors
Laboso, Daizy Chepkirui
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
The telecommunication industry in Kenya have been effecting changes like innovation, deregulation technology advancement and stiff competition. Telecommunication are coming up with various innovation like mobile money transfer service to cope with the forces of the market that remain to threaten the competitiveness, survival and profitability. Kenyans continue to embrace new and emerging services as the factors are expected to keep driving the mobile sub-sector. However, at some point financial assets for the public become unclaimed due the death of the owner of the assets or lack of awareness on how to claim the financial assets. The government of Kenya enacted legislation to control the management of unclaimed financial assets. One of the main regulations enacted is the Unclaimed Financial Asset Act of 2011. The Act outlines how various institutions are supposed to handle unclaimed assets. The act come about after the taskforce on unclaimed assets reported unclaimed assets amounting to billions were being held by financial institutions and were circulating in the financial system to earn interest. Telecommunication industry is required to surrender the unclaimed assets to Unclaimed Financial Assets Authority. According to Safaricom financial results 2021, Safaricom statistics on comprehensive income from FY 21, FY 20, FY19, FY18 and FY17 includes; 68,676.2m, 73,657.9m, 62,489.3m, 55,290.5m and 48,444.4m respectively. This shows how Safaricom income has been increasing since 2017 to 2020 but a slight decrease in 2021. The study period for purposes of financial performance measurement was ten (9) years that is from year 2009 to 2017 to show the trends in financial performance before and after UFAA establishment. The research was guided by the following theories: Agency theory, resource dependency theory, occupation theory of property, and John Locke labour theory on property. The purpose of this study was to determine the effect of unclaimed financial assets on financial performance of telecommunication firm in Kenya. The sub-objectives included determining how unclaimed customer deposits, unclaimed dividends and unpaid wages contributes to the financial performance of telecommunication firm. The research adopted a descriptive design to examine the cause-effect relationship between the variables that will include all the three mobile telephone service as per Communication Authority of Kenya Annual report. Inferential and descriptive statistics including mean and standard deviation was done to give a summary of the variables. The study made use of secondary data. Further, multiple regression analysis was applied to analyse data. It was run on SPSS to determine any association between unclaimed financial assets and financial performance. From the study findings, it revealed the association between unclaimed dividends and return on equity is positive and significant while relationship between return on equity and abandoned wages recorded an insignificant effect because the value was greater than p-value (P.0.05). Regression coefficients results indicate a positive and insignificant effect between unclaimed customer deposits and return on equity (=0.037, p<0.859). Further, the results show positive and significant effect between unclaimed dividends and return on equity (=0.112, p<0.0287) and a negative and insignificant effect between unclaimed wages and return on equity also exists (=-0.266, p<0.199).
Description
A Research Project Submitted to School of Business in Partial Fulfillment of the Requirement for Award of Degree in Masters of Business Administration (Finance) of Kenyatta University, January, 2022
Keywords
Unclaimed Financial Assets, Financial Performance, Telecommunication Industry, Kenya