Tanzanian businesses wary of online trading scams

MANY would-be online traders in Tanzania are concerned about the security and safety of personal funds and data, and are therefore hesitant to start trading, but now are advised to engage reputable brokers to safeguard their businesses.

“The rise of the digital age has resulted in an information overload and often a lot of this information is made up of unqualified opinions and regurgitated statements,” says Jay Mawji, Managing Director of Infinox, an online trading partner who is currently expanding into Tanzania with the aim of making Trading contracts for difference (CFD) trading both accessible and understandable to traders.

 “As technology has grown, scammers have evolved to take advantage of digital opportunities, and as the number of online traders is expected to continue growing, it is vital for aspiring online traders to safeguard themselves when it comes to trading,” he says.

“As such, it is vital for potential traders to work with an established, reputable, and regulated broker who will monitor the activities of its clients, partners and stakeholders to make sure they are operating within the regulatory guidelines,” he says.

“The implementation of stricter regulations has been a game-changer, and regulated firms put their customers first and ensure they are running their companies in a sustainable way.”

 Finding the right broker

 In order to find the right broker, Mawji says it is crucial to conduct research on the brokerage and the regulations that they abide by and adds that the best place to do so would be the Securities Commissions who keeps an up-to-date register of all firms and their business activities.

Secondly, he explains that traders must recognize the investment risk versus reward, and take into account that it should be a balanced approach between the two, while being cognizant that if it is too good to be true, it usually is.

“Be wary of schemes that are too easy to open an account, too easy to deposit, too easy to trade, and too easy to make money. This is a clear sign of limited regulations and processes,” he says.

It is also important to question that if your investment is too low, how is the brokerage making money? If this is the case there is often more at play than we may initially realize.

 Mawji explains that the broker’s physical location also comes into play, citing that although the business is one that is run online, firms that have a physical presence demonstrate a commitment to their business, their teams, and ultimately to their clients.

It is for this reason that Infinox will soon offer clients on-the-ground presence in Tanzania – an extension of its London-based headquarters.

 Mitigating risks is key

While some traders may still fall victim due to more-elaborate schemes, Mawji does offer valuable advice on how best to mitigate the potential risks.
He says that apart from never dealing with unregulated brokers, traders should take their time when it comes to deciding which broker to partner with, and be familiar with their services.

Most importantly, Mawji suggests that aspiring traders ask a friend for advice as they will most often only have your best interests at heart and make you aware of any potential risks, they may be aware of.