Lingering Effects of DDEP: Investors Still Struggling to Access Their Own Funds

For many Ghanaians, the pain and frustration of the Domestic Debt Exchange Programme (DDEP) are far from over. The DDEP, which officially ended in February of last year, continues to affect individuals who invested in various collective investment schemes with financial institutions. Many still find themselves unable to access their own funds, a painful reminder of the programme’s lasting impact.

Numerous investors, who entrusted their savings to investment companies, have faced roadblocks in withdrawing their money. In some cases, investors are being asked to wait anywhere from one to six months for access to their funds. For others, accessing their investments comes with a heavy haircut, drastically reducing the amount they are able to withdraw.

One anonymous investor shared his story with The High Street Journal, revealing the harsh reality many face. He attempted to withdraw GH¢ 1,000 from a popular investment bank, only to be informed that he would receive just GH¢ 692.58, excluding exit fees. Another group of investors, dealing with a different company, applied to withdraw part of their investments to meet an urgent need. They agreed to receive the market value, which was lower than the actual balance in their investment fund. However, they were told it would take a minimum of six months to receive their money. When they asked for a maximum timeframe, the investment company was unable to provide one, leaving them in a state of uncertainty.

Even investment companies that are in better financial standing can only allow a withdrawal limit of GH¢ 1,000 per week, regardless of the investor’s total holdings. This cap has added to the growing frustration as investors feel trapped, unable to access their savings when they need it the most.

These distressing experiences persist even as the government boasts that the economy is improving, projecting growth rates of 4% or more this year. For those struggling to access their own money, such claims ring hollow.

The collapse of Ghana’s bond market, following the DDEP, is being blamed for the continued difficulties faced by investors. Many investment companies were pressured by the government to invest heavily in government bonds. This forced some short-term collective investment schemes, which traditionally avoid long-term bonds, to expose their clients’ funds to unnecessary risks. The result has been devastating for risk-averse investors, particularly those nearing retirement, who thought they had safeguarded their money by choosing short-term instruments.

“When all the talks about the DDEP and haircuts were happening, I didn’t worry because I had invested in a short-term instrument. I thought my money was safe,” one investor recounted to The High Street Journal. “I was shocked to find out that my short-term investment, which was supposed to guarantee me stability and security, had been wiped out. I’m risk-averse because of my age, so I thought I was playing it safe. Someone must pay for the pain we’re enduring.”

Despite public discussions around the DDEP and haircuts fading from the headlines, the pain and frustration persist for many, leaving them with little hope and no clear answers. Through no fault of their own, these investors continue to bear the brunt of decisions made far beyond their control.

Ghana’s domestic savings rate remains low compared to other nations in the region. According to World Bank national accounts data, the country’s savings rate averaged 9.9% of GDP in 2023. This is only slightly better than Togo’s 9.3% but lags far behind other countries like Benin (31.5%), Côte d’Ivoire (22%), Nigeria (41.7%), and Senegal (29.4%).

With such a low savings rate, these painful experiences are likely to deter more people from investing in the future. If investors lose faith in financial institutions, it could further undermine Ghana’s investment landscape, depriving the country of much-needed capital for growth and development.

Source:thehighstreetjournal.com