BusinessDay

Why Nigerians keep falling victim of Ponzi scheme – experts

Poverty, greed, and lack of financial education have been identified as reasons Nigerians continue to fall victims of ponzi schemes, investment experts have said.

According to them, Nigerians have lost billions of naira to criminals masquerading as investment ‘portfolio managers’.

It is estimated that Nigerians have lost about N300 billion in the last few years to ponzi schemes. In 2016, 3 million investors lost about N18 billion to the infamous Marvodi Mundial Movement (MMM) and most recently, people lost about N17 billion to the MBA Trading & Capital Investment Limited, another N22 billion to the Imagine Global Solutions, and about N47 billion to Chinmark investment among many others.

Speaking at a PennyTree Twitter Space themed ‘Ponzi Schemes: Why Do Nigerians Keep Falling?’, Adeleke Awotayo-Ayeni, a disruptive innovator and co-founder of PennyTree, said some people are innocent victims of ponzi schemes, while many others made a conscious choice to invest their money in it.

“For a first timer, I can say it is a mistake, maybe, due to misinformation, and lack of financial education but when one falls for a scheme a second time, it means the victim actually recognised the risk and decided to take it,” Awotayo-Ayeni said.

Read also: Ponzi schemes: Nigerians shun red flags for big bucks

He described financial literacy as one of the most important factors that could contribute to the prevention of ponzi schemes, adding that people should stop investing in business ventures they do not know much about.

“Ponzi schemes promise outrageous returns that no legitimate business would be able to provide. People just want to make quick cash without necessarily working for it; they would prefer to invest money and get double the amount within a short time,” he explained.

Continuing, he said: “People often forget that just like any skill, one needs to have the financial knowledge to make sound decisions. For example, a person with zero financial literacy would fall for any investment that would offer a huge return.”

“Financial education will help people understand the modus operandi of the ponzi schemes and how they can prevent it.”

He said the most common way to recognise ponzi investment was through offering unrealistic and outrageous profits as well as having no clear business model or asset attached to the investment.

Elizabeth Okaome, the host, said the programme was organised by PennyTree, a fintech company with a strategic focus to accelerate the expansion and adoption of financial products and services, to expose the modus operandi of ponzi schemes with a view to preventing people from falling victims.

She said the need to discuss the issue has become necessary considering the negative effect the fraudulent business activities have on the lives of millions of Nigerians who have been swindled of their hard-earned money.

According to her, PennyTree aimed at increasing the financial literacy of people by teaching them how to detect fraudulent transactions as well as how to make wise investments.

PennyTree’s Twitter Space holds every Friday at 7pm, to discuss trending issues as they affect the people and proffer solutions when necessary.

Other speakers include Ayo Ogunowo, co-founder at PennyTree; Yomi Akande, developer and tech lead at PennyTree; and Ash Aliu, brand coach and content creator, among others.

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