Mali MMF Investors Rush to Withdraw as CMA Steps In to Avert Genghis Capital’s Debt Crisis

Nairobi – In the wake of a sticky debt burden that has hit the headlines this week, a number of nvestors in the Mali Money Market Fund (MMF), managed by Genghis Capital, have been gripped with panic and embarked on withdrawal of their funds for fear of the firm getting deeper into a legal tussle with its creditors.

Some have taken to social media to complain about being unable to make withdrawals from their accounts and it has been a trending topic on most platforms since Monday.

This panic was triggered by reports of Genghis Capital facing significant financial strain due to unpaid obligations, leading to heightened calls for intervention by the Capital Markets Authority (CMA) of Kenya.

The Mali MMF, a product aimed at democratizing investment through mobile technology in partnership with Safaricom, has been a popular choice among Kenyans looking to invest with ease through M-PESA. However, recent revelations about Genghis Capital’s financial troubles, including a substantial debt of KES 355 million, have sent shockwaves through the investment community.

Withdrawal Triggered by Debt Concerns

The day began with social media platforms buzzing with posts from concerned investors, some of whom reported difficulties in accessing their funds. The situation escalated as news spread of auctioneers being dispatched to liquidate Genghis Capital’s assets, a clear sign of the firm’s dire financial state. This led to an urgent rush by investors to withdraw their investments from the Mali MMF, fearing the potential loss of their savings.

CMA’s Swift Intervention

Recognizing the potential for a financial meltdown that could affect thousands of small investors, the CMA quickly issued a statement assuring that client assets within the Mali MMF are safe. “We are engaging with Genghis Capital to formulate a roadmap to address these outstanding debts,” stated the CMA in a press release.

CMA says the scenario underscores the financial pressures facing some investment banks in Kenya, highlighting the risks involved in high-stake financial engagements. “CMA would like to clarify that clients’ assets are held in segregated accounts separate from the funds of Genghis Capital Limited,” it stated in a press release.

Edward Wachira, CEO Ghenghis also moved to assure investors that their money is safe, “As a market intermediary and fund manager for both the Genghis Unit Trust Fund and Mali Money Market Fund, we guarantee that trustees and independent licensed custodians securely manage all client funds. There is a clear separation of assets between client and company assets, protecting your investments regardless of any internal matters that may arise.” He said in a press statement.

CMA emphasized that the funds are held in segregated accounts, protected by regulatory guidelines established in 2023, and managed by authorized custodians and trustees.

The CMA’s intervention aims to stabilize the situation, reassuring investors that their investments are secure while Genghis Capital navigates its financial challenges. This move is critical not only for Genghis Capital but also for maintaining confidence in Kenya’s burgeoning mobile investment sector.

Market Sentiment and Future Outlook

The sentiment among investors remains mixed. While the CMA’s assurances may have calmed some, the rapid withdrawal attempts highlight a broader concern about the transparency and stability of mobile-based investment funds. Financial analysts suggest that this crisis could lead to tighter regulations or a reevaluation of how such funds are managed and marketed to the public.

“Today’s events underline the need for robust investor protection mechanisms, especially in innovative financial products,” said an analyst from a local investment firm. “While the CMA’s response has been commendable, the incident serves as a wake-up call for both regulators and fund managers.”

The Debt

Genghis Capital’s assets have been put for auction over the debt owed to a South African entrepreneur, Auswell Mashaba. The investment bank was also unable to stop Moran Auctioneers from seizing its office equipment for sale to recover the debt.

The move came after High Court Judge Alnashir Alee Visram declined to certify the application of the stockbroker as urgent. The legal battle stems from a loan of US$2,265,000 (Sh293.08 million) that Mashaba issued to Genghis Capital on January 25, 2017, with an interest rate of 7.25 per cent.

After failing to repay the money, Mashaba sought a judgment for $3,100,000 (Sh401.13 million) and continued interest.

Court records reveal that former Managing Director of the stockbroker, Geoffrey Gangla admitted the default on February 18, 2020. An agreement signed later on October 18, 2021, stipulated that Genghis Capital would pay US$2,950,000 (Sh381.75 million) plus interest from October 15, 2020, with specific payment deadlines.

However, the company only managed to pay Ksh 114.35 million (US$1,115,565) leading to the current auction proceedings. The auctioneer has listed office items for sale such as furniture, electronics, and office equipment, in an attempt to satisfy the debt.

This includes 16 desktops, 13 metal cabinets, 17 wooden cabinets, a five-seater leather sofa, two television sets, a fridge, and multiple laptops, chairs, and desks.

In a desperate move to halt the auction, Genghis Capital sought legal intervention. The firm went to court to block the sale. An order from the High Court dated January 14, 2025, instructed the auctioneer to sell the attached properties after a 15-day notice period.

Moving Forward

As Genghis Capital works with the CMA to address its debt issues, the focus will be on restoring investor trust and ensuring the operational integrity of the Mali MMF. Investors are advised to monitor official communications from the CMA and Genghis Capital for updates on the fund’s status and any changes in management or partnership structures.