Experts from various sectors of the economy have identified poverty, greed and lack of financial education as reasons people continue to fall for Ponzi schemes.
The experts were alarmed at the prevalence of fraudulent activities and the rate at which Nigerians are losing billions to criminals masquerading as investment portfolio managers.
A Ponzi scheme, according to Investopedia, is a financial arrangement where investors contribute money to the portfolio manager who promises them a high return and are paid out with the incoming funds contributed by later investors.
The money is not invested in anything but just moves around and when there is no more money, the scheme crashes.
It is estimated that Nigerians have lost about N300 billion in the last few years to Ponzi schemes.
In 2016, three 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 couple running Imagine Global Solutions, and about N47 billion to Chinmark investment among many others such as Chymall and Qnet.
The speakers who spoke at a PennyTree Twitter Space, on the topic, “Ponzi Schemes: Why do Nigerians keep falling?”, noted that due to the rising inflation, unemployment, and quest to make more passive than active income, people have turned to investment schemes for their monetary goals.
This, the discussants opined, has made people easy prey to scams and schemes that have them losing their money investing in Ponzi and pyramid schemes.
Contributing, a disruptive innovator and co-founder at PennyTree, Mr. Adeleke Awotayo-Ayeni, explained that while some people were innocent victims of Ponzi schemes, many others made a conscious choice to invest their money in it.