MFI scam victims ‘greedy’ - Amoabeng

Founder of UT Holdings, Prince Kofi Amoabeng, has said there should not be too much sympathy for “greedy” victims of microfinance scams.

According to Mr Amoabeng, the depositors are aware of the risks involved by saving with such microfinance companies, who invariably promise huge interests on deposits.

In the past one year, several customers have lost their savings with some microfinance companies including DKM Diamond, Jastor Motors, God is Love Fan Club, mostly in the Brong Ahafo Region.

The Bank of Ghana has since withdrawn the licences of about 70 microfinance firms and introduced new control measures.

Mr Amoabeng, speaking to Class Business, said: “With the microfinance [institutions], some of them are registered with the Bank of Ghana, some are not. Now for those that are not registered, it means they are not regulated. Those that are registered will have some kind of regulation, but there are so many of them and Bank of Ghana, honestly, by my own estimation hasn’t got the resources to regulate them effectively.

“…People want cheap money and quick money and they are greedy because when somebody says: ‘I will pay you 20 per cent a month,’ ask yourself: ‘What is he going to do with the money that he is going to pay me 20 per cent.’ Of course, people are gullible and they want cheap money and so on and so forth… some people (depositors) are aware that they (microfinance firms) cannot pay but they think that even if they are going to collapse, I can take 30 per cent monthly and if I last for about four months, I can get my monies back. So, if it collapses, I’ve got my money back. So they go in knowing that it could collapse but they are building their hopes that they can collect enough money before it collapses. So, there shouldn’t be too much sympathy; I don’t have too much sympathy for those who go in because they know what they go in for,” he added.

According to the businessman, although the passage of the Deposit Protection Act is good, he has suggested depositors should rather be insured. The bill seeks to protect depositors from unforeseen circumstances that may result in loss of funds. “The Bank of Ghana hasn’t got a bottomless pit of monies to say that if you deposit your money with a company that is registered with the Bank of Ghana and the money is lost, we are going to pay and I don’t think they should even make the first commitment because then people are going to come on them and so on and so forth. But let’s see how the bill is implemented and what it means. But the main thing is, in other jurisdictions, you have insurance plans for the process…”