We need to pay clients - Fund managers cry to govt
The Ghana Securities Industry Association (GSIA), is pushing for the urgent release of more funds to enable members of the association to settle their teeming investors and clients who continue to knock on their doors for the release of what is due them.
In a public notice to its investors, the association said, “To date, more than GHc1.43 billion of the GhC1.87 billion exposure has been validated. Out of this, only GHc83 million has been paid to fund managers and their clients in cash with the balance paid in the form of the non-interest bearing instrument.”
Describing the amount released so far as woefully inadequate, it said, “This makes up less than seven per cent of the total validated exposures.”
Stakeholder engagements
The association said it had had a number of engagements with key stakeholders, namely; - the Securities & Exchange Commission (SEC), the Ministry of Finance (MoF), the Consolidated Bank Ghana (CBG) and the Receiver, adding “these engagements with stakeholders are still ongoing. Our goal is for our numerous clients to be given a higher cash portion.”
While acknowledging what it described as the tight fiscal situation of the government, the association was optimistic that an increase in the cash component of the pay-out would ease the already tight liquidity situation in the sector and “provide relief to these clients”.
Further appeal
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“On behalf of our members and these clients, we are appealing to the government through the Ministry of Finance to urgently consider our request.
“We trust that a speedy resolution of this issue will restore calm and bring relief to an already ailing sector.”
Background
On August 16, 2019, the Bank of Ghana revoked the licenses of 23 savings and loans institutions and 347 microfinance institutions as part of its banking sector clean-up exercise.
Investment management firms or fund managers had a total of GHc1.87 billion locked up in these failed institutions.
The exercise was carried out with the assurance that no depositor or investor would lose his or her funds.
There has been an ordered process since, with the appointed receiver for the process of paying depositors and investors all or part of their monies after their balances have been reconciled.
According to the association, in a notice to depositors of the said institutions, the receiver, Mr Eric Nana Nipah, announced that, “with effect from Thursday, April 2, 2020, the Consolidated Bank Ghana will be issuing a government backed non-interest bearing financial instrument worth approximately GHc4bn to depositors.”
The characteristics of the instrument outlined were: zero coupon rate, that is, non-interest bearing for five year period and a drawdown of 10 equal instalments of every six months; while the first draw down is March 31, 2021.
The association reiterated that in spite of the assurances, to date, more than GHc1.43 billion of the GHc1.87 billion exposure has been validated.