Is Your Money Safe? Concerns Mount Over MALI MMF Amidst Debt Woes

The Kenyan investment landscape has been abuzz with concerns surrounding the MALI Money Market Fund (MMF), a product of a partnership between Safaricom and Genghis Capital. While Mali has presented itself as a convenient and accessible investment avenue via M-Pesa, recent recurring technical issues, coupled with news of Genghis Capital’s financial difficulties, have raised serious questions about the fund’s stability and the safety of investors’ money.

Over the past few weeks, Mali MMF users have reported experiencing frequent technical issues, including difficulties accessing their accounts, viewing balances, and processing transactions. While occasional technical glitches are expected with any digital platform, the repeated nature of these problems raises concerns about the underlying infrastructure and operational efficiency of the fund. These disruptions not only inconvenience users but also erode trust in the platform’s reliability.

Adding to the unease is the recent directive from The Capital Markets Authority (CMA) to Nairobi-based investment bank Genghis Capital Limited. The CMA has instructed Genghis Capital to present a plan for settling an outstanding $2.74 million (Sh354.4 million) debt owed to a South African businessman. This directive comes amidst threats of auctioning Genghis Capital’s assets to recover the debt. Given that Genghis Capital is the fund manager for Mali MMF, this news has understandably sparked widespread anxiety among Mali investors.

In response to the growing concerns, Genghis Capital issued a statement assuring investors that their funds are safe, emphasizing a “clear separation of assets between client and company assets.” This separation is a crucial regulatory safeguard designed to protect investor funds from any financial distress faced by the fund manager. The statement reiterated that “all client funds are safe.” It is important to note that the Trustee (KCB) and Custodian (Stanbic Bank) also play a critical role in safeguarding these assets.

The timing of these events also raises serious questions about whether this is all a part of Safaricom’s strategy. The confluence of Mali’s recurring technical problems occurring just weeks after Safaricom launched ZIIDI, its own competing money market fund, appears less like an unfortunate coincidence and more like a calculated move.

This new offering, ZIIDI, directly benefits from any erosion of trust in MALI. By allowing the perception of instability to fester around the MMF, Safaricom effectively pushes users towards its newer, seemingly more stable product potentially prompting a mass exodus. This conveniently positions Safaricom to capture a larger share of the MMF market.

An Opinion: Is Mali Still a Safe Bet?

While Genghis Capital’s statement offers some comfort regarding the safety of funds, the ongoing technical problems and the shadow of their financial difficulties create a significant issue: a complete lack of convenience. Even if the money is ultimately safe, the inability to reliably access accounts, view balances, or execute transactions negates the very selling point of their service.

Using MALI is currently a frustrating experience. This loss of convenience, more than any fear of outright loss, will undoubtedly drive users to seek alternative, more reliable platforms, especially with competitors like ZIIDI readily available. Ultimately, even if the funds are secure, the sheer inconvenience will likely be the deciding factor for many MALI MMF investors.