GHANA’S FUND MANAGERS TO SET ASIDE MORE CAPITAL

CAUGHT in a crisis in which they’re unable to meet client withdrawals, Ghana’s fund managers will be forced to set aside 20 times more capital than they do now to avoid running out of cash again. The Securities and Exchange Commission will require money managers to increase their minimum capital reserves to 2 million cedis (R5.64m) from the current 100 000 cedis, director-general Daniel Ogbarmey Tetteh, said in Accra. The directive, which will require law changes, will be fully communicated by the end of the year for compliance by December 2020, he said. The markets regulator is seeking to strengthen the industry and restore confidence as at least 70 000 investors struggle to access savings that were trapped in the aftermath of a separate clean-up of banks, savings and loans companies, and micro-lenders. Existing capital requirements were too low, allowing too many people to start fund-management companies, hindering supervision, Ogbarmey Tetteh said. “Some who will not be able to meet that capital will have to fall out,” he said. “If you are a fund manager you must keep to the obligations in the contract with your clients. You signed an investment contract to do ABC – just stick to it.” The SEC is investigating 21 fund managers for sinking as much as 5 billion cedis in risky investments such as unlisted bonds, direct private equity stakes and related-party deals that are difficult to liquidate. | Bloomberg