The Capital Markets Authority (CMA) in Uganda is taking action to address issues of fraud in the capital markets industry, with a particular focus on Collective Investment Scheme products. This effort coincides with World Investor Week 2023, which runs until October 8.
CMA advises potential investors in Uganda to conduct thorough research before investing in any product or service. They also emphasize the importance of investing with licensed and regulated firms. Dickson Ssembuya, CMA’s Director of Research and Market Development, cautions investors to be cautious about unsolicited investment offers, diversify their investment portfolios for risk reduction, and regularly monitor their investments.
However, Ssembuya highlights that Collective Investment Schemes remain a favorable investment option due to their benefits, such as risk diversification through pooling savings with others, the ability to invest in significant ventures with small savings, and tax advantages with exempted returns.
World Investor Week is a global campaign supported by the International Organization of Securities Commissions (IOSCO). Its goal is to raise awareness about investor education and protection and showcase regulatory initiatives in capital markets.
This year marks the seventh annual World Investor Week, observed on October 2. CMA has observed an increase in fraudulent operators and unlicensed financial schemes in Uganda, including individuals or firms posing as investment advisers and fund managers, as well as pyramid schemes operating in various forms, both physically and online.
CMA has taken action against some of these complaints and advises the public to avoid seeking investment advice or dealing with unlicensed individuals or entities. Recently, CMA issued a warning about three companies engaged in chicken farming—Capital Chicken Ltd, The Mall Fund Ltd, and Veta Plan Chicken—that were accused of operating like capital markets entities without proper licenses.
These companies collected investor deposits and promised returns of 40 to 60 percent after five months. Authorities suspect that these returns were funded by new investors, which is indicative of a Ponzi scheme. To combat such schemes, CMA is organizing online public lectures to educate Ugandans on protecting themselves against scams.
