Accra, Ghana, December 31, 2018//-A renowned economist and Professor at the University of Cape Coast (UCC), John Gatsi, says ineffective investment warning notices issued by financial market regulators are not the solution to addressing the Menzgold crisis.
According to him, “In an environment of ineffective investment warning notices and weak financial literacy, innocent investors become victims and not criminals”.
The government had ordered Menzgold, a gold dealership firm to stop operating which resulted in the locking out of customers’ investments.
Before the closure of the firm, several notices were issued by the Securities and Exchange Commission (SEC) and the Bank of Ghana (BoG), but were ignore by the investing public.
Why regulators issue notices
Prof Gatsi explained: “The purpose of issuing notices and directives by financial market regulators is to provide effective information to existing and potential investors to avoid and extricate themselves from unacceptable investment schemes”.
Lack of information and perhaps ineffective communication about amoeba – like investment schemes does not yield good results, he added.
Prof Gatsi continued: “Financial market regulators do not issue notices just because they must do. They do not issue notices merely to provide evidence they have done their part. They do so to inform and change a trend”.
In case of the Menzgo crisis, how and when the notice was issued is very important. Also, he observed that it is a common characteristic of financial market regulators that they are always late so by the time they issue notices many have already been captured.
“If the notices are not well communicated, such notices even when issued in quick succession will not discourage citizens from further investments. We are in a country where only a few people can routinely read these notices in the newspapers and from the website of the regulators, Prof Gatsi told African Eye Report.
These notices, given that in the midst of the many disturbing effects of unlicensed deposits taking financial institutions, many more are emerging, implying that the originators are not law abiding citizens and the notices don’t get to a lot of people who patronize these schemes.
Call for support for regulators
For effectiveness all faith based organizations, transport unions, and others should support the regulators by making these notices as part of their routine announcements, he urged.
“This is very important because majority of the operators and investors or depositors are members of these organizations”.
Prof Gatsi who is also the Head of Finance at the UCC Business School stressed that the scale of the problem created by these schemes is very alarming and additional measures should be taken to ensure that any information from regulators is effective.
“When notices are given after people made investments such investments are already endangered. When the warning notices are not circulated effectively, people will continue to patronize them”.
Let us think about a situation where the Catholic Church and the Church of Pentecost for example read warning notices from BoG to the congregation on Sunday, the effect can be great”, Prof Gatsi added.
Society has changed let us all be willing to support the regulator to make impact with their warnings. Let the regulator be informed that the media may announce these notices which have become defensive tools, according to him. Many Ghanaians will get to know these important notices through other channels which will make more impacts.
Ghanaians who are not on social media are more than those active on social media. In fact some don’t even download pdf documents.
Treat Menzgold investment victims as victims
He therefore appealed to Ghanaians to treat Menzgold investment victims as victims and desist from using foul words to describe them.
In his own words: “Let investment victims be treated as victims and not with painful descriptions. A social problem with young people, widows, prospective entrepreneurs and the aged have emerged, we should be willing to solve it”.
A Senior Fellow at the Centre for Socioeconomic Studies (CSS), Set Doe said it was saddened to read sections of the Ghanaian media ridicule the 60,000 Ghanaians whose monies had made some other Ghanaians richer.
“This conduct by sections of the media simply reflects how the Menzgold saga and other social problems have been narrowly misunderstood, especially in the media”, he added.
For months now, thousands of Menzgold customers are unable to access their investments after the SEC ordered its closure, due to its unregulated business model.
Earlier, this month, Menzgold had asked its staff to proceed on leave following increasing threats to its properties as well as staff of the company.
Menzgold has been unable to pay its clients their dividends due to an ongoing battle with SEC and the BoG over its operations. While the state institutions say the company has not been licensed to take deposits, Menzgold insists it does not take deposits and does not answer to the two institutions.
African Eye Report