...Accuse Banks, Security Officials of collusion to squeeze them out of business
… Cry out over threat to N1trillion Investments, 500,000 jobs
Portfolio investment Managers in the nation’s economy have raised the alarm over alleged collusion between banks and security officials with the support of some officials of the Central Bank of Nigeria (CBN) to squeeze them out of Business, according to a report by DAILY ASSET.
Portfolio Investment managers are retail fund managers who mobilise term deposits from clients and pay out attractive interests at expiration of specific tenures usually from 30-90 days but sometimes for longer periods.
The portfolio investment managers, who operate in the downstream segment of the financial services sector, are spread across the country with thousands of depositors or investors in their clientele.
The newspaper’s investigations revealed that following the recent exponential growth of the business, the deposit money banks became threatened as the portfolio investment managers appeared to be mobilizing higher deposits than the banks in relation to the size of the firms in the sector.
It further revealed that depositors, mostly in the low and middle- income brackets, weary of the many hidden and exorbitant charges in the banking system, may have abandoned the banks and instead opted to place their deposits with the portfolio investment managers, whose operations were found to be less cumbersome, time- saving and yielding higher returns on investments.
A typical portfolio investment managing firm pays up to 30 per cent interest on deposits, depending on the duration of tenure and size of investment.
It was learnt that by end of 2020, the Portfolio Investment management firms had over 2 million clients with investments worth at least N1trillion.
Worried by this development, the Deposit Money banks were said to have colluded with some officials in the CBN and the Securities and Exchange Commission (SEC) to move against the firms.
The banks were also said to have used the police and other security agencies like the Economic and Financial Crimes Commission (EFCC) and the Nigerian Financial Intelligence Unit, to harass some operators of the firms, whom they accused of running a parallel economy.
Investigations further revealed that some operators of the firms have come under constant harassment by security officials, with some of them arrested and detained last year, while some of them had their bank accounts placed under suspension.
One of such companies based in Port Harcourt, the Rivers State capital, with at least 1000 staff, was affected by the clampdown as its accounts with one of the banks were also frozen, a source confirmed to DAILY ASSET Correspondent.
The security agencies were said to have hurriedly obtained Court orders with which they used to clampdown on the portfolio investment companies.
A source close to some owners of the firms claimed they were treated harshly by the CBN officials and not given fair hearing in the whole process, adding that the Court Orders used to clampdown on the companies were hurriedly obtained and may have been lacking in due process.
The source also disclosed that the operators have made repeated appeals to the CBN to set up a regulatory system for the portfolio managers to no avail, adding that the banks were bent on frustrating any move to bring the market segment under proper regulation.
“In 2019 for instance, 149 portfolio investment managers were ready to register with the SEC in the absence of a specific regulator for the sector, but at the end, only two applications were approved and the rest were ignored,” the source stated. It was alleged that the only two that scaled through belonged to some officials of some regulatory agencies.
He said it was a thing of regret that the CBN being made to deny the nation the benefits of bringing the sector under formal regulation like payment of taxes, employment generation and income generation for investors.
“I can assure you that some families are now depending on these investments to pay house rents, school fees and meet other family obligations,” an operator who wanted to remain anonymous told our Correspondent, regretting that such families were being denied their livelihoods.
He said in other climes like United Arab Emirates (UAE), the authorities had not only brought the portfolio investment operators under regulations but had categorized them in wholesale and retail segments depending on the size of their operations to derive the full benefits for the economy.
“Our view is that the banks are unduly scared of our activities; they don’t understand how we are succeeding in a market where they are failing (and) this is the only reason we are facing persecution,” the source explained.
He called on President Muhammadu Buhari and the National Assembly to intervene and save the portfolio managers from further harassment by security officials, the banks and some collaborators in the CBN.
“We need the President and members of the National Assembly to come to our aid to protect many people who will lose their jobs if the clampdown on our operations continue,” he appealed.
Another operator, who also pleaded not to be identified, was of the view that in a country where hundreds of thousands of graduates are roaming the streets without employment while others are losing jobs on a daily basis, “those who are creative and are contributing to reduction of poverty, should be encouraged rather than witch-hunting them.”