from ARIMANDO DOMINGOS in Maputo, Mozambique
MAPUTO, (CAJ News) – QUACKERY has reared its ugly head again in Mozambique’s financial services sector, prompting authorities to initiate another clampdown.
The latest deceit comes in the form of pyramid schemes.
The modus operandi of these bogus entities includes the assurance of periodic interest to members of the public that invest in financial assets.
These are apparently paid monthly or quarterly.
Customers that attract more members of the public to join are promised bigger financial rewards.
The Bank of Mozambique (BM) has issued a warning to the public, amid indications it is intervening to tackle the latest scourge.
“Given the growing trend in the number of entities and the denunciations that have been made, we communicate to the general public that these entities are not licensed by the Bank of Mozambique,” the country’s apex bank stated.
The financial regulator has previously intervened to cleanse the sector of such illegality.
Such schemes usually start on a high with initial investors getting the payments as promised. The success of the fly-by-night organisation depends on the flow of new depositors.
However, with time, as more people join, the coffers run dry and the project collapses, with the later investors left in the lurch.
The latest scheme by the unlicensed entity referred to by BMis reminiscent of the so-called Mutual Aid Credit Association that authorities cracked down on in 2016.
It was an unregistered institution but it lured unsuspecting citizens to deposit funds in the scheme, with a promise of 30 percent interest monthly.
A crackdown by BM led to the bogus association’s accounts frozen and left thousands stranded and unable to recover their money.
The illicit operation involved more than MT480 million (US$6, 8 million) from 16 000 depositors.
It cost the Mozambican government more than MT29 million ($413 000) in lost taxes.
In December last year, BM cancelled the trading licences of two credit unions and five bureaux de change and ordered their liquidation for operating illegally.
The Women’s Credit Union of Nampula and Savings and Credit Cooperative, as well as the bureaus namely Acácio Câmbios, Al-Meca, ExecutivoCâmbios, Sara Moçambique and SarbazCâmbios, were closed.
In October, BM imposed sanctions on 20 local financial institutions for violations of the Anti-Money Laundering and Anti-Terrorist Financing Act.
RogérioZandamela, the central bank governor, has led the crackdowns since he assumed the top post in 2016.
The anti-corruption champion was previously at the International Monetary Fund (IMF).
AtumaneSimango, an analyst, hailed the intervention of the central bank.
“The no-nonsense response by the bank is laudable,” he said.
Simango also warned people against patronizing pyramid schemes.
“Each time the bank intervenes, it is, unfortunately, the members of the public that are left poorer. People should refrain from investing in such illegality as these schemes are reliant on their money,” he added.
The government of President Felipe Nyusi was re-elected into office in late 2020 with a pledge to tackle corruption in the Southern African country.
– CAJ News