My introduction to the investment industry in Ghana came through a seminar during my freshman year at the university. It was your typical investment seminar, more inspirational than informative, and leaving me feeling like I had discovered the keys to wealth.

What followed was a period of learning, debating and practicing. I opened a bank account, I purchased my first mutual fund, I purchased treasury bills when I finally saved up the money to. I was raw and passionate. I was certain that I was going to be rich in no time.

One of the privileges of being introduced to investing early on is that you lose your enthusiasm before you have any significant sum of money to play with. You understand your capacity to make mistakes, you appreciate risk and you have an idea of the difference between what you read and what actually happens.

And what I learnt early was that Ghana was not the USA. The GSE-CI is not the S&P 500 or the Dow Jones Index. Received wisdom like stocks outperform bonds over time is not gospel here. It’s been 30 years and we do not have 50 listed companies. The government remains the main attraction in terms of investment activities, with the public debt being more than 3 times larger than the market capitalization of the GSE. The investment industry is severely underdeveloped.

With such a situation, one could not have picked a worse country to be afflicted with a crisis in the fund management industry. Many fund managers are struggling to pay off deposits to their clients. Business has halted at many of these companies. The stories of frustrated clients are enough to traumatize anyone. And for some reason, this situation has largely been left unattended to by the government.

The general attitude seems to be that the fund managers made mistakes and therefore they should figure out how to pay off the depositors. But that is quite a cynical approach to take. Even if you ignored the predicament that investors are going through, you cannot ignore the disastrous impact that the collapse in confidence in the investment industry could have on the economy.

In a recent post, I complained about government’s size in the investment space. The government dominates the capital and the money markets. And yet it does not have the capacity to provide jobs for the many young people desperately searching for them. After about 30 years of financial liberalization, what kind of financial sector have we been able to build? How many start-ups are funded by local banks? How many private sector workers can vouch for their job security?

If you have ever tried to sell an investment product, you will understand how important trust is to closing a deal. Trust is what fuels finance. Trust is what makes fractional reserve banking possible. It is what makes investing long-term possible. Any short-term relief gained from avoiding the erosion of trust in local investment firms will be outweighed by the reduction in savings and the throttling of private sector development that will result from that process.

It may already be too late to return to the pace of investment we have seen in recent years. There are people who have sworn never to purchase any investment product after the bad experience they have had. Nevertheless, the situation is not beyond salvaging. But everyday that goes by makes it more difficult. Action is needed now.