SMARTVEST company secretary and portfolio manager, Michael Mautsahuku says the proliferation of pyramid schemes in Zimbabwe exposes financial institutions for not keeping up with the times.
Zimbabweans are falling for dubious money-making schemes that promise them instant gains and the most recent scheme to collapse was E-Creator.
Mautsahuku said the country's financial institutions have been stuck on traditional methods of investment where they pick money from depositors and charge fees.
At times, he said, they did not give people a return.
"When clients want to invest in them, they give them very low rates like currently their rates range between 2% and 5% per annum and investors don't accept such very low rates, so they take their money elsewhere,” he told Standardbusiness.
“For microfinances, they get better returns whereas a bank gives 2,5% you can achieve 10 times more with an asset management firm or microfinance institution normally 10 to 15% per annum.
"How have the banks been exposed?
“We have had a number of pyramid schemes that have collapsed in the country, but what you need to know is that many people who invest in these schemes do so knowingly.
“They know their risks, they know that they can lose money, but they will be trying to take the first-move advantage."
Mautsahuku was speaking on the sidelines of a Chartered Governance and Accountancy institute in Zimbabwe (CGI) summer school in Nyanga last Thursday.
He said banks should come up with products that the people want, not what they want. He also said Zimbabweans were risk takers.
“That's why any pyramid schemes that comes up flourishes and then eventually collapses,” Mautsahuku said.
“Banks or financial institutions are supposed to come up with these online derivative products that people are so keen to invest in with very high returns.
“People are trading forex online, commodities, synthetic indices, stocks and so on despite the fact that sometimes they lose their money.
“The myth that is there is that anything with very high returns is fake.
“But there are these products that are real and have very high returns.
“There are crypto currencies and banks don't offer these. Being unregulated doesn't mean illegal,” he said.
The secretary said one can earn a living by trading crypto online through contract for differences.
"Though there is the other side of losing money, you invest money which you are prepared to lose but it’s also good to try.
“So, banks need to come up with these derivatives with very high returns," he said.