A consumer lobby has accused financial regulators of laxity in protecting poor and small investors against resurgent dubious get-rich-quick schemes.
Consumer Federation of Kenya (Cofek) secretary-general Stephen Mutoro said the Central Bank of Kenya (CBK), the Sacco Societies Regulatory Authority (Sasra) and the Cooperatives department had allowed the rogue firms to proliferate.
“The re-emergence of pyramid schemes and related financial scams is a result of laxity of the regulators. Being the fastest fundraising avenue, unscrupulous entrepreneurs and politicians are using the schemes to fund the ongoing campaigns. The regulators are yet to act on previous culprits,” said Mr Mutoro.
The Cofek boss said that the level of vetting for both new and existing co-operative societies was wanting.
“Anyone can operate unlicensed co-operative society since Sasra compliance and enforcement capacity has been waning over time. The State must decisively act on the Nyenze pyramid schemes victims report,” he said.
Majority of the con games, however, are run by entities registered under the Ministry of Industrialisation, Trade and Co-operatives that is yet to comment on the matter.
On Friday the CBK and Sasra warned on the re-emergence of Ponzi-style investment schemes.
The two regulators in a joint statement also cautioned against the activities of some rogue co-operative societies that have gone beyond their primary mandate of accepting contributions from their members.
Credit: Business Daily