In January 2019, the Standard Investment Bank (SIB) announced the launch of a new product dubbed Mansa X, that would have a 24 percent returns on investment.
The lender termed the product as “Kenya’s first and only CMA regulated Online Forex Trading Money Manager”. If genuine, the product is arguably the highest paying investment in the country for any money market product.
Currently, the benchmark lending rate for the Central Bank of Kenya (CBK) is 7%, while the average lending rate in the market is around 13 percent per anum. Any investment returning 24 percent seems to be the perfect investment, for any investor.
However, there seems to be some inconsistencies and red flags in Mansa X, SIB’s product, which seems to have several characteristics of a Ponzi scheme.
First, the scheme gives the hope of getting a whopping 24 percent return, when the market they claim to be investing in – offshore and currencies – are underperforming.
For instance, the Nikkei of Japan is down 5 percent, the Dow Jones of US down 13 percent and the FTSE of Europe down 19 percent. Where will Mansa X get these huge profits to return 24 percent to investors?
Also, Mansa X lacks the underlying assets that can pay the 24 percent return being promised to investors, in case the money markets fail. Among the asset classes they list include currencies, precious metals, commodities, cash and cash equivalents, derivatives, single stocks and stock indices.
They do not list even a single tangible asset in their name, which investors can use to recover their money in case the scheme goes down. This means that in case the scheme collapses, it will go down with the Ksh2.2 billion investors’ money that they hold now in form of assets under management.
Despite terming itself as the “first” online forex trading scheme, there existed similar schemes that promised similar returns to investors before collapsing, such as the Maalin Group.
Maalin Group billed itself as an Online Forex trading company regulated by the CMA, but disappeared with Ksh15 billion, which has never been recovered to date. Maalin Group CEO Abdalla Mohamed Ali dumped his car at the Jomo Kenyatta International Airport before fleeing the country.
Maalin had reportedly registered at least 600 members mostly from Dubai, Saudi Arabia, the US, Kenya, and Somalia. To join, investors were required to deposit at least Ksh2 million.
The company had operated in the country for over 8 years.
Mansa X even admits that “the possibility exists that you could sustain a loss of some of your initial investment”, meaning that in such instances you have no option other than accepting losses. Such time could be coming soon.
“The possibility exists that you could sustain a loss of some of your initial investment and past performance is never indicative of future results. Terms and conditions apply,” the firm says in its website.
The minimum one can invest with Mansa X is Ksh250,000, plus a management fees of 10 percent and 10 percent above the hurdle rate, in this case 24 percent. This is an indicator that the scheme could be targeting the middle income earners and the wealthy, who sometimes might not do a due diligence on a scheme before investing.
“All that investors are asking for is a list showing exactly where the funds are invested, an inquiry to SIB and CMA for a list of where MansaX invests so that we can recalculate the returns for ourselves went answered,” one of the investors told Kahawa Tungu.