Another scam hits microfinance companies?

More than 200 customers of eight microfinance companies in the Volta Regional capital, Ho, have staged a demonstration to demand the refund of the money they deposited with the companies.

The demonstrators, mainly petty traders and artisans, were of the belief that they had been duped by the companies and so called on the government to intervene and arrest managers of the microfinance companies and compel them to refund the people’s investments to them.

The companies, whose operations became very prominent between 2014 and 2015, are the Littledrop Investment Club, the Prosperity and Good Health Development Winners, the Royal Foundation, the Global Leads, the Royal Care, the Marceph Wealth, the JODEQ Network, Clear Image and Divine.

This unfortunate news comes at a time when the dust is yet to fully settle on the infamous DKM Microfinance scandal which made people lose millions of Ghana cedis.

The Daily Graphic is deeply shocked by this new development because it did not expect that after the various warnings and pieces of advice by President John Dramani Mahama, the Bank of Ghana and many other prominent investment experts, many people would still allow themselves to be swindled by some unscrupulous persons who have little or no knowledge in fund management.

It is a fact that after the long period of economic difficulty arising out of the power challenges which forced many companies to fold up, leaving thousands unemployed, the temptation is to invest in instruments that will yield the best returns. 

Today, business in Brong Ahafo is on its knees because the capital of a lot people has been squandered by the near-Ponzi schemes operated by the owners of DKM.

The Daily Graphic has always maintained that any company that is offering interest on savings at a rate way beyond the average 91-day Treasury Bill rate must properly be assessed and the public urged to desist from putting their earnings in such schemes.  

From our own assessment, it is evident that people get attracted to such schemes because of the mouth-watering interest rates offered them, forgetting that the juicier the offer, the riskier the schemes. 

While we sympathise with the victims of the alleged fraud in Ho, we expect the Bank of Ghana to get its ears on the ground to cause the arrest of the owners of such companies that run schemes that have not been duly registered by the central bank. 

The scams are becoming one too many and we should not sit aloof to see scores of innocent people lose their livelihoods and, in some cases, their lives to a handful of people who seek their own interest and not that of their customers. 

Our pain, however, is that the reputation and good works of reputable microfinance companies are being tarnished by the few involved in shady deals. The BoG must deal decisively with these fraudulent companies before they cause havoc to our economy.