NAIRAMETRICS
Key Highlights
- Ponzi schemes have continued to thrive in Nigeria despite the negative effects it has had on people, with the Nigerian Deposit Insurance Corporation (NDIC) reporting that Nigerians have lost over N911 billion to Ponzi schemes and others in 23 years.
- The reasons for the continued success of Ponzi schemes in Nigeria include the high rate of unemployment, poverty, and financial illiteracy. Many Nigerians are also driven by the desire for quick wealth, making them susceptible to the lure of Ponzi schemes.
- Ponzi scheme operators often take advantage of the lack of enforcement and regulation in the country, using false documentation and complex strategies to conceal their main aim. Additionally, some celebrities and social media influencers have endorsed these schemes, leading to more people investing in them.
In December 2016, some Nigerians were thrown into panic, and anguish, when the Mavrodi Mondial Moneybox (MMM) scheme announced it was freezing the account of members in the country.
The yuletide was near and many had invested a month earlier to have something to spend for the festive period. For many, the scheme was a way to make money, and many have entrusted them having spent almost a year in the country and also a global ‘acceptance’ with subsidiaries in about 100 countries.
There were reports of how Nigerians reacted to the news with many who went through untold hardship. According to the Nigerian Deposit Insurance Corporation (NDIC), about three million Nigerians lost a reported N18 billion to the scheme.
The nature of Ponzi schemes is often rooted in the desire to make quick money or easy gain, and as such, unsuspecting individuals are lured into it. Ponzi schemes are often disguised as a business where ‘investors’ go in to invest and get returns that could be as high as 100 percent and little or no risk.
Ponzi scheme in the actual sense is a fraudulent scheme that thrives on people’s contribution, and is more like “robbing Peter to pay Paul.” Ponzi schemes often rely on new entrants to pay off the existing ones who have been promised some gains over a period of time.
The circle continues by using the money gathered from new entrants to pay old ones. After a while, having gained a level of trust, the founders vanish into thin air leaving individuals to count their losses.
One would have thought the experience with MMM would have changed the landscape of Ponzi schemes in Nigeria, but they have continued to be on the increase in different ways and forms.
Over the years, Nigerians have had a taste of different Ponzi schemes or wonder banks such as Twinkas, Ultimate Cyclers, Get Help Worldwide, and Swiss Golden, among others both locally and nationwide. The mode of operations is similar, and would often involve a member-to-member way of paying a certain individual an amount of money.
