The view that Ghana’s Collective Investment Scheme (CIS) industry—encompassing mutual funds, unit trusts, and ETFs regulated by the Securities and Exchange Commission (SEC) under the Securities Industry Act, 2016 (Act 929)—has collapsed due to 2022-2025 economic and financial crises holds partial merit. While not a total collapse, the sector has suffered severe contraction, with assets under management (AUM) declining by over 30% post-DDEP, liquidity strains, and eroded confidence. This discussion examines causes and impacts on individual investors.

Causes Supporting the Collapse View:

• DDEP and Debt Restructuring Impacts: The 2022-2023 DDEP imposed haircuts on bonds (up to 37%), a core holding for CIS (over 60% of portfolios). Funds like Black Star Advisors faced massive redemptions, leading to suspensions and value erosion, as per BoG’s Financial Stability Review 2023. This undermined trust, with AUM dropping from GHS 20 billion pre-crisis.
• Macro-Economic Pressures: High inflation (peaking at 54% in 2022), cedi depreciation, and IMF-mandated austerity reduced disposable income, curbing inflows. External shocks (COVID, Ukraine war) exacerbated volatility, per IMF 2023 report.
• Regulatory and Operational Challenges: SEC’s tighter oversight post-2017 cleanup exposed governance issues, while low returns (negative real yields) deterred investors. Disintermediation to T-bills (yielding 20-25%) drained CIS funds.
• Counter-View: Not Full Collapse: Recovery signs in 2025, with AUM rebounding via diversification to equities and digital assets under SEC’s Capital Market Master Plan. Funds like Databank adapted, showing resilience.

Grievous Impact on Individual Investors:

• Financial Losses: Retail investors, comprising 70% of CIS participants, suffered capital erosion (e.g., 20-30% NAV drops), delaying retirements or education funding amid high living costs.
• Eroded Confidence and Behavioral Shifts: Panic redemptions amplified losses, fostering risk aversion. Many shifted to informal savings, increasing vulnerability to scams, contra BoG’s financial inclusion goals.
• Wealth Inequality Aggravation: Middle-class investors (e.g., pensioners like Madam Akuffo) hit hardest by DDEP, widening gaps as elites diversified internationally.
• Market-Wide Effects: Reduced securities market liquidity (GSE turnover down 15%), hindering capital raising for businesses, per 2024 Investment Climate Statements.

In conclusion, while crises caused significant downturn, strategic reforms (e.g., SEC’s risk guidelines) can revive the industry, emphasizing diversification and education for investor protection.