The Chief Executive Officer(CEO) of Eco Capital Investments Management, Mr Dela Agbo has said Many Ghanaians do not have proper insight when it comes to their finances and has thus asked government to set a definite policy framework for the regulation of the fixed deposit investment product.
He explained that unlike other investment products such as the mutual funds, equities, corporate bonds among others which are regulated and approved by the Security and Exchange Commission (SEC), the fixed deposit investment does not have such distinct regulation.
Addressing some investors at a Q&A session regarding the current situation in the financial sector on December, 5, 2018, Mr Agbo added that, after the Bank Of Ghana (BOG) gives license to financial institutions (Savings and loans Companies and Micro finances), it allows these entities to roll out the fixed deposit as part of their banking products without a separate regulation on these deposits and the institutions capacity on these investments.
“Fixed deposits happen to be a bank product. it is one of the product that banks use to raise money so a bank is looking for more money to finance trading activities hence they issue the fixed deposit then they expect investors to put money into that fixed deposits. Now what I am saying is that since its a product just like mutual funds or equities or corporate bonds that BOG or SEC has to approve before investors invest in it, The fixed deposit product should also be like that,” he said.
“Because banks are given license by BOG and is ready and willing to take money, I think that is the risk point for all of us because if we dont pay attention to it, we will still have the DKM, ASN, Menzgold among others and all other issues continue to happen, where someone with BOG license starts mobilising soo much money and we know that with ghanaians once you increase the interest rate, you will get more people coming to invest and that is risky”.
He disclosed that the introduction of a distinct policy framework would help curb the frequent collapse of financial hubs and protect the investors monies.
“Somebody needs to look at it and analyse these banks and say that you can offer fixed deposits of 100,000 and for you based on your capacities you can only handle 50,000 and the other 10,000. Somebody has to look at that so that they can take on these debts that will equate to their strengths. There are different investment products that can match your investment objectives not only fixed deposits,” he said.
Most Ghanaians are ‘Financial Illiterates’
Mr Agbo disclosed that most Ghanaians tend not to be interested in in-depths financial discussions should be partly blamed because their ignorance and lack of knowledge in these arears is the reason investors keep getting swindled.
He said, “Some Ghanaians are financial Illiterates and all they want is their profit on a certain money that has been invested. They don’t probe further into the different existing investment products and how beneficial it can be to them. When a new company springs up and promises a certain tempting percentage of interest, they quickly jump on without critically analyzing.”
“It is time for us to consciously develop interest in financial matters. We all make money but we also need to understand the financial terrain so that we do not become victims of fraud, money laundering and Ponzi schemes,” he added
To curb this problem, He urged all banks, savings and loans companies, as well as investment firms to hold frequent seminars and educate their customers about their finances and its security and also break financial terms down to the understanding of the public.