Growing the trading market has an enormously positive impact on specific countries because it means higher interest rates, better income, and increased investments. Africa is a great example of it. Everybody knows that African countries are not strong in their economic sectors. The level of poverty is very high and investments from the tourism sector are not enough to solve the general and global problems.
The financial sector in specific countries like Nigeria, Kenya, and South Africa significantly improved after the 2013-2016 years when the Forex trading investments began to rise in the African market. Over the years, more and more people were registered as brokers and more people started to invest as a trader on Forex. This is how African countries currently have more than 1 million traders on the Forex market which, makes them the second biggest trading market.
Even though several countries are actively involved in Forex trading, the leading position is for the republic of South Africa. This country is the leader with monthly revenues, average investments, and a number of traders. Increasing the number of brokers makes competition tenser. For that reason, South Africa activated a local regulatory called, the Financial Sector Conduct Authority which, licenses brokers and gives them a certificate as proof of safety for traders.
Despite the fact, that some brokers are regulated by FSCA and provide interested traders high-quality services as well as safety, the number of scam brokers are significantly increased. As African Banking Risk Information Center claims, in 2020, more than R5.1 billion was fraud. They also say that this is not the real number because there is a high number of traders, who are not reporting the fraud facts. So this is the number on which SABRIC has information.
The Main Reasons Why a Number of Scam Brokers Increased in SA
Before you decide that Forex trading is not safe to try, here is the list of South African Forex Brokers which are licensed and provide the users with high-security services. Using these platforms is safe. They have a great reputation among traders and are under specific security regulations. If you are a beginner in the Forex market, you should remember that for the South African market, always choose the broker which will be licensed and transparent with the information about regulations.
Experts say that Covid-19 and fast-increasing interest in the South African Forex market caused the raising number of scam brokers. You may have a question about how the pandemic is connected to frequent fraud crimes. The changeable regulations and fluctuating interest rates as well as not having a strong monitoring system for safety checking, caused increasing fraud from scam brokers by 25%. The average number of daily fraud facts on the SA Forex market is 1 000.
The fraud facts significantly increased in spring 2022. For example, April was the peak of crime facts. According to the data, it revealed more than 1 300 facts. The situation before the Covid-19 pandemic was not very positive, and the monthly average fraud facts equaled 500.
Most of the victim traders lost a high amount of money. For example, 35% of traders on average lost R83 000. The critical situation was in Kenya too, where more than 13 000 traders lost a huge amount of money to scam brokers. As one of the victims from the SA says, he lost R100 000 from the unlicensed broker by watching the tutorial video and the trading guide. After he followed the steps, the investment disappeared from the account.
Because the main indicator of revealing the scam broker is the official license, the relevant competencies published 521 different brokers who are probably scammers because they are registered on the SA Forex market and aren’t licensed by FSCA. Some of them have offshore licenses which are not trustworthy because mentioned fraud facts were also revealed from offshore licensed brokers.
How to Avoid Scam Brokers on the SA Forex Market?
The main thing which automatically will protect you from scam brokers on any FX market is knowledge. Without having any knowledge about working mechanisms, main rules, and other indicators, it will be easier to believe lies from scam brokers. So make sure to introduce main guides to how to start trading with Forex safely.
The next key advice will be to choose the broker according to the following criteria: reviews, informative transparency, reputation, and information about the license. You should research the comments and reviews about the specific broker. Check their official website and find out if they are transparent enough. If the addresses, contact information, licenses, and policies are published in detail, you can consider the broker as a safe to try.
For those who are interested in the SA Forex market, remember that a trustworthy broker should be under the regulations of FSCA which is the main authority in the country. If it is not licensed or there is no information about it, do not use the broker for trading.