Saturday, May 23, 2009

Ignorance drives people into pyramid schemes – Economists

By Perege Gumbo
The guardian; Saturday 16, may 2009

The emerging and re-emerging of pyramid schemes that have been collecting huge amount of money from common Tanzanians calls for intensification of public awareness campaign over the importance of investing in company shares currently being traded at the Dar es Salaam Stock Exchange, economists have said.

A cross section of economists in Dar es Salaam said yesterday that lack of awareness over the importance of investing in shares at both primary and secondary markets had been driving people to join pyramid schemes, some of them with interest rates as high as 200 per cent.

Chief Executive Officer of Core Securities Limited George Fumbuka said what happened with the controversial Development Entrepreneurship Community Initiative (DECI) signified high liquidity within the community.

“The fact that for the short period that DECI has existed manage to spread all over the country acquiring more than 700,000 members who contributed more than 50bn/- should be taken as an eye opener for the government to embark on strategic awareness campaigns over the importance of investing in the shares,” he said.

About 11 years since the Dar es Salaam Stock Exchange started business, the highest number of investors in the shares has been less that 30,000.

Fumbuka said players in share trading seemed to have excluded the common man by targeting higher and middle class people.

He has re-examination of the mode of awareness plans to the Tanzanians to enable them participate in their economy through buying company shares was needed to reverse the current trend particularly after revealing ordinary people had enough liquidity.

An officer with the Tanzania Securities Limited said the Dar es Salaam Stock Exchange in collaboration with the Capital Markets and Securities Authority needed to embark on intensive awareness programmes.

The officer who sought anonymity said the awareness programmes would increase the level of understanding among Tanzanians on the role and importance of investing in company shares traded at the DSE and other products available at the market.

He said in essence brokers had no funds to undertake such awareness programmes which he termed as critically important for the people to make informed decisions before they invest in the shares and other stocks.

The officer said he believe if the people would be informed they would not risk their monies in pyramid scheme but would rather invest in share stocks.
The government closed DECI operating early this year accusing it of operating illegally by accepting deposits, role reserved for banking institutions only.

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