By Sebastine Okafor, Ph.D.
As a victim of Ponzi schemes in 2020 due to naivety and subsequently a victim because of greed, I feel that it is time for Nigerians to understand why they should stop falling victim to these schemes and focus on businesses that yield genuine profit.
For many Nigerians, the story is the same. Someone introduces a “once-in-a-lifetime-opportunity” promising to double your money within days or weeks. Friends testify that they have been paid. Social media is flooded with screenshots of successful withdrawals. Religious leaders, civil servants, students, traders, and even professionals rush to invest. Then, one morning, the website stops working, the Telegram group disappears, customer service goes silent, and billions of naira vanish into thin air.
Unfortunately, history keeps repeating itself because many people fail to understand what a Ponzi scheme really is.
The term Ponzi scheme originated from Charles Ponzi, an Italian swindler who, in 1920, deceived thousands of investors in the United States. Ponzi claimed he had discovered a business that generated extraordinary profits. Instead of investing the money as promised, he simply used funds collected from new investors to pay earlier investors. As long as new people continued to join, the illusion of profitability remained. Once the number of new investors declined, the entire scheme collapsed.
More than a century later, the strategy has changed in appearance but not in principle.
Today’s Ponzi schemes wear different clothes. Some present themselves as cryptocurrency investment platforms. Others claim to trade forex, artificial intelligence, agriculture, real estate, music streaming, online reading, sports betting, e-commerce, or digital marketing. Some ask people to complete simple online tasks, watch videos, read articles, or recruit others before they can withdraw money. Whatever the name or business model, the foundation remains the same: the money paid to old members comes from the deposits of new members rather than from genuine business profits.
Recent examples in Nigeria include MMM, MBA Forex, CBEX, National Reading Culture (NRC), and several other online platforms that promised unrealistic returns before collapsing. Despite repeated warnings from regulators, millions of Nigerians continue to lose their hard-earned money.
What baffles many is not the strategy adopted to defraud people across the world but why Nigerians keep falling for these schemes.
Looking at this question, it may sound funny or vague, but the first reason is greed. This is because many people desire extraordinary wealth without corresponding effort. When someone promises a 50 per cent or 100 per cent return within a few days, common sense should immediately raise questions. Unfortunately, greed often silences reason. The person who had a large sum but invested little would start blaming himself or herself for not investing a “huge” amount that could have tripled the supposed income and thus would reinvest both the profit and borrow more just to satisfy greed. By doing so, such a person enters into a state of quagmire where both the income and capital are lost.
The second reason is economic hardship. High unemployment, inflation, and the rising cost of living make many people desperate for quick financial relief. Fraudsters understand this and deliberately target struggling citizens with promises of financial freedom. This, in many ways, ensures that victims, especially naive ones, borrow to participate. Some do so because their dependants asked them to do so in order to become financially independent from the proceeds. Many sell their properties just to participate in it because of the vague hope of gaining financial freedom.
The third reason is social proof. Nigerians easily believe opportunities recommended by friends, family members, colleagues, church members, or respected community leaders. When trusted people appear to be making money, many join without carrying out independent verification. The worst are people who are widely trusted. You can imagine where a lecturer, pastor, or an assumed man of the people is advertising a Ponzi scheme knowingly or unknowingly and the effect on the minds of their subordinates. Many even promise to repay should the money be lost, which most often is never repaid. Some of these people go as far as opening offices just to legitimize the scheme and subconsciously coerce their subordinates into becoming victims.
Another reason is poor financial literacy. Many people do not understand that genuine investments involve risks and reasonable returns over time. They do not know that any investment promising guaranteed and unusually high returns with little or no risk should immediately be treated with suspicion and avoided irrespective of whoever is promoting it and the level of persuasion the person is using.
Moreover, there are many dangers that come with Ponzi schemes which go far beyond financial loss that people do not know.
One of them is that families lose life savings meant for children’s education, house construction, healthcare, and retirement. It is on record that marriages have broken down because spouses secretly invested family funds in Ponzi schemes without the consent of their partners. Some victims fall into depression after losing everything. Others borrow money to invest, hoping to recover previous losses, only to become trapped in debt. In extreme cases, victims have taken their own lives because they could not cope with the shame and financial devastation.
Another danger is that the wider economy also suffers. Money that should have gone into agriculture, manufacturing, transportation, small businesses, and productive investments is diverted into fraudulent schemes that create no real value. This weakens economic growth and destroys public confidence in legitimate investment opportunities, thereby increasing hardship and economic instability.
With the recent failed Ponzi schemes and their negative effects on the people, there is an important lesson every Nigerian must learn, including victims, victors, and prospective members. Nigerians should know that there is no legitimate investment that consistently doubles your money within a few days or weeks without substantial risk. Real wealth is built through productive businesses, professional skills, entrepreneurship, disciplined saving, long-term investing, and patience. Value must be created to serve a human need and generate income. Whether you are a trader, farmer, teacher, artisan, entrepreneur, or salary earner, sustainable wealth comes from creating value, not chasing unrealistic promises.
As a Nigerian, before investing in any opportunity, ask simple questions: Is the company properly registered with the relevant regulators? How exactly does it generate its profits? Are the promised returns realistic? Can its business model survive without constant recruitment of new members? Would I still invest if nobody showed me screenshots of withdrawals? If you cannot clearly answer these questions, walk away.
As someone who has personally experienced the pain of losing money to Ponzi schemes, I understand the emotional and financial damage they cause. My experience taught me that there is no shortcut to genuine prosperity.
Nigeria does not need more Ponzi schemes. Nigeria needs more entrepreneurs, more investors in legitimate businesses, more innovators, and more citizens who understand that sustainable wealth is built gradually through integrity, hard work, and informed financial decisions.
Let us stop financing fraudsters. Let us stop chasing easy money. Let us build wealth the right way. If you become another victim of a Ponzi scheme, you will lose a lot, as the government does not have what it takes to stop it. If it has never been you, do not let it be you.