Investment is a good venture, especially when one has fully prepared for the associated risks with the move.
With the rising cost of living, it’s imperative that we prioritize investment and, preferably invest with the lowest risk possible, to generate the highest yielding returns we can.
[contextly_sidebar id=”0jHYfRGAS0UIo8GWimFGC4GRnl3W5jKC”]High rates of return on your investments are wonderful because you don’t have to invest as much capital to reach your investing goals.
Butt with higher returns you would have to take more risks.
So what is an investment?
The need to discuss investment is largely premised on the recent ‘’scams’’ and ‘’duping’’ of customers of some so called microfinance institutions who promises huge returns even higher than rates being offered by government.
Let’s take a critical look at these microfinance companies in which several people have invested heavily in over the years and have lost their investments.
In December 2011, the Bank of Ghana came out to say that it has not licensed Onward Investment Limited, a company which took deposits from the public and ostensibly engaged in on-line foreign exchange trading.
The company, which operated branches in Accra, Kumasi, Sunyani and Techiman, initially offered interest rates of 25% for a trading cycle of 42 days.
In December 2011, the interest rate was raised to 35% as a special Christmas bonanza.
Because the company’s operations were unauthorized, the BOG felt they constituted a serious danger to the public.
The company was therefore directed to cease operations and refund all deposits taken.
The company ignored the directives of Bank of Ghana and continued to operate.
The activities were consequently reported to the Police, who proceeded to arrest three officials of the company on January 11, 2012.
US Group of Companies
In 2014, The US Group of Companies Limited, a Ghanaian–owned company embarked on a massive publicized tilapia business investment on the Volta Lake.
They invited investments into the breeding of tilapia with the promise of handsome returns.
The project received massive patronage from many investors from various parts of Ghana many of whom were not able to recoup returns on their investments as advertised.
As a result they instituted civil action against the company claiming that their investments were going down the drain since US Group of Companies had failed to pay them their agreed profit which ranged from various sums some of which were between GH¢120,000 and GH¢60,000.
After several futile attempts to cash their money at the bank, the worried investors resorted to the courts.
The owner was later arrested on the 31st of October 2014 in Kumasi to assist in investigations.
This institution also had its operations suspended on the 11th of May 2015 by the Bank of Ghana for contravening the banking act.
According to BOG, the company which commenced operations in 2005 carried its work in a manner that was detrimental to the interest of depositors.
DKM with its head office in Sunyani and branches in Bolgatanga and Wa failed to hold sufficient assets to meet its liabilities to depositors.
A 90 day moratorium was placed on its operations but after that expired August 11, 2015, the central bank decided to extend the period to allow management of the company address issues raised after an audit was made into its operations.
Diamond Winners Microfinance
This recent development at this particular institution can be described as interesting.
Checks at the company’s branch in Bolgatanga showed that the premise was under lock and key. Customers were told that the Bank of Ghana had placed a moratorium on the company’s operations an assertion which has been denied by the central bank.
BoG’s Head of Other Financial Institutions Supervisory Department, Raymond Amanfu told Citi Business News, neither the bank nor the financial Intelligence Center (FIC) had frozen their accounts.
He however said the bank was ready to meet with the customers and explain issues to them.
Avoiding being duped
One common thing that runs through the operations of all these companies is that majority of the depositors were hoping for huge returns over a period of time.
The companies, Onward Investments, US group of companies, DKM and Diamond Winners Microfinace all seemed to promise rates that were pleasing to the ear.
Civil servants, business women, artisans, farmers and the likes have over the years fallen for such investments deals that seem too good to be true.
In the case of DKM, majority of the customers who spoke to Citi Business News said they invested between 1000 cedis 50,000 cedis.
For Diamond, some invested in excess of 15,000 cedis to 80,000 cedis.
The Financial Intelligence Center and the Bank of Ghana has been advocating the need for the investing public to be circumspect when dealing with such companies.
In the case of Onward Investments, the BOG said, ‘’The public should note that interest rates, equivalent to over 300 per cent per annum, such as those offered by the company, are not realistic and therefore not sustainable. Accordingly, the Bank of Ghana advises the public to desist from dealing with unauthorized financial institutions, especially those that offer very high interest rates such as was the practice with Onward Investment Ltd.’’
To avoid this as a prospective investor, market analysts propose low risk investment instruments such as Bonds, Stocks and Mutual Funds.
Other alternative investments options include Futures, FOREX, Gold, Real Estate, Etc.
These are much safer as compared to investing lump sums into intuitions that seem to offer unrealistic rates on the market.
Meanwhile the Bank of Ghana has advised the public who may be in doubt about the legality or otherwise of a financial institution to check with the Banking Supervision Department of the Bank of Ghana or visit the Bank’s website – www.bog.gov.gh – for a list of all authorized banks and non-bank financial institutions.
By: Lorrencia Nkrumah/citifmonline.com/Ghana