By Dada Ahmed.
In recent years, the word “Ponzi” has become all too familiar in Nigeria’s financial space. A Ponzi scheme is a fraudulent investment scam promising high rates of return with little risk to investors. The term originated from Charles Ponzi, an Italian swindler who defrauded thousands in the U.S. in the 1920s by paying returns to earlier investors, using the capital of new investors. In Nigeria, the surge of Ponzi schemes has become a major source of financial loss for millions, often wiping out life savings and breeding distrust in genuine investment opportunities.
Nigeria’s tryst with Ponzi schemes dates back several decades, but the phenomenon gained national prominence around 2016 with the rise of MMM (Mavrodi Mundial Movement). Promising returns of up to 30% in 30 days, MMM attracted millions of Nigerians desperate for quick financial relief in the wake of a recession. The scheme collapsed spectacularly in December 2016, leaving many in financial ruin. Sadly, despite the painful lessons of MMM, new versions of Ponzi schemes continue to emerge under different disguises.The latest of such scheme is what is F&B that left millions of Nigerians bemoaning their huge financial loss.
These schemes manifest in various forms: online “investment” platforms, cooperative societies, unregistered fintechs, fake crowdfunding projects, and even religious or community-based thrift cooperatives among others. Many of these schemes operate outside regulatory oversight, often leveraging aggressive marketing, social media hype, and testimonials to lure unsuspecting Nigerians into their traps.
Ponzi schemes typically follow a pattern: the early birds are paid handsomely from the contributions of new joiners. This creates a false sense of legitimacy and profitability, leading to an influx of investors. The bubble bursts when new investors stop coming or the masterminds decide to abscond. In Nigeria, some notorious schemes have left bitter memories, destroying wealth and lives.
The emotional and financial damage is enormous. Victims range from retirees and students to civil servants, market women, and even professionals who invest their salaries and loans hoping to multiply them. Many have ended up in debt, depression, and social disgrace. Some lose not just money but relationships, jobs, and their peace of mind.
Government agencies such as the Economic and Financial Crimes Commission (EFCC), the Securities and Exchange Commission (SEC), and the Central Bank of Nigeria (CBN) have made efforts to clamp down on Ponzi schemes. However, their efforts are often reactive rather than proactive. One major limitation is that many Nigerians do not report such scams either out of shame or ignorance, making it difficult for regulators to intervene on time.
In recent times, the SEC has launched investor education programmes and hotlines to warn citizens. It has also been publishing lists of illegal financial operators. But enforcement remains a challenge, as new platforms keep springing up with fresh names and more sophisticated methods of deceit. More needs to be done in terms of surveillance, prompt investigation, prosecution of operators, and recovery of stolen funds.
Nigerians themselves must play a vital role in checking the Ponzi menace. Desperation and greed are key vulnerabilities that scammers exploit. Every citizen must develop a healthy skepticism toward any scheme that promises unusually high returns with little or no risk. The rule of thumb is: if it sounds too good to be true, it probably is.
To check Ponzi schemes, Nigerians must ask basic but critical questions before investing: Is the company registered with the Corporate Affairs Commission (CAC)? Is it licensed by the SEC or CBN? Are the investment returns realistic and sustainable? Is there a clear, understandable business model behind the profits being promised? What are the reviews from trusted sources,not social media influencers paid to promote them?
Financial literacy is a powerful antidote to fraud. Schools, religious bodies, NGOs, and the media must all contribute to building a more financially informed citizenry. Financial education should be part of the school curriculum from secondary level upwards. The more people understand how money works, the less likely they are to fall for get-rich-quick traps.
Technology can also be harnessed to fight Ponzi schemes. There is a need for a centralized, publicly accessible platform where Nigerians can verify the legitimacy of investment companies. Regulatory agencies can also collaborate with tech firms to track, trace, and take down fraudulent platforms more efficiently.
Community watchdog systems can be effective too. Traditional rulers, local government councils, and community leaders can help by sensitizing their people and reporting suspicious schemes early. Grassroots awareness is key because Ponzi schemes often thrive in rural or semi-urban areas with low regulatory presence.
The media must remain a strong ally in this fight. Rather than just report on the damage after the fact, journalists and editors must regularly expose dubious investment platforms and analyze trends in financial fraud. Investigative journalism, if well-supported, can unearth emerging threats before they spread widely.
Ultimately, checking Ponzi in Nigeria requires a multi-layered strategy involving government, regulators, communities, the media, and individual citizens. It is not enough to condemn the schemes after they collapse. What is needed is a culture of preventive vigilance, ethical financial behavior, and collaboration.
The story of Ponzi in Nigeria is one of pain, greed, and gullibility,but it doesn’t have to continue. We can write a new chapter where Nigerians invest wisely, protect their money, and build wealth through honest, regulated, and sustainable means. To do that, we must stay alert, stay informed, and say a firm “no” to anything that smells like a scam. After all, our financial future depends on the choices we make today.
Ahmed, one time Assistant Editor in Chief,News Agency of Nigeria, NAN, publishes The Reporters.
