News hotlines: 08111813019, 08025868561
Email: email@example.com, firstname.lastname@example.org
The Research & Development Unit of Yudala, Nigeria’s fastest growing e-commerce outfit has concluded a new study on why Ponzi schemes remain popular in spite of their clear and present dangers.
It would be recalled that the scheme was largely unheralded for a long time. Ponzi schemes came to the consciousness of the entire nation in 2016.
The study revealed that with the descent of the Nigerian economy into its first full depression in over two decades, many Nigerians embraced the rise of these money-spinning schemes as a way out.
The new Yudala report recalled further that at the height of its fame, Mavrodi Mundial Movement (MMM), one of the most popular, had over three million Nigerians on its subscriber list.
Despite the crash of this and many others that came after it, many are still succumbing to the lure of Ponzi schemes.
Many Nigerians have fallen for these slick marketing techniques at their own peril…
3.Tough economic climate: Nigeria fell into its full recession in 29 years at the turn of last year. Data from the National Bureau of Statistics (NBS), the Central Bank of Nigeria (CBN) and other data agencies revealed that the economy experienced its first full-year recession due to drop in oil output to a 27-year low and reported paralysis in other sectors, mainly as a result of foreign exchange shortages. With job losses in various sectors and inflation rising to double digit figures, many distraught Nigerians were in desperate search of a lifeline. In came all manner of Ponzi schemes promising incredulous returns on investments. These schemes, with newer ones popping up and dropping off on a regular basis, remain quite popular amongNigerians.
4.Free (and massive) publicity: When it discovered the huge number of Nigerians being drawn into the risky net of Ponzi schemes, the Nigerian government and its regulatory agencies decided to sound a note of caution. Various public financial and anti-graft institutions, including the Central Bank of Nigeria (CBN), Securities and Exchange Commission (SEC), Nigerian Deposit Insurance Corporation (NDIC) and Economic and Financial Crimes Commission (EFCC) repeatedly warned that the schemes are fraudulent and that those investing in them may lose their money. Commendable as the warnings were, it also inadvertently played into the hands of the operators of these schemes by making them more popular.
5.Lucrative referral system:Ponzi schemes thrive on promises of extraordinary returns through a system which relies on regularly recruiting loads of new subscribers or investors for it to remain afloat. As a result, attractive incentives are offered to “Guiders” or those who succeed in recruiting new investors. As conspicuously displayed on the website of one of these schemes: “You get 10% from all deposits of the participant you invited. Inviting new members into the Community is your additional contribution to its development. But nobody force (sic) the members of the Community to invite new participants. But at the same time, understanding that the network can’t exist without development and participants’ encouragement in the form of referral bonuses motivate many people to take an active position.” Slick, isn’t it?
6.Faceless and sophisticated nature of operations: The NDIC revealed the sheer scale and popularity of a particularly (in)famous Ponzi scheme when it disclosed that, an estimated three million Nigerians lost N18billion when MMM suspended payment to investors last December. This has not deterred operators from floating other numerous investment schemes and ensnaring more gullible “investors” in its unsustainable fold. Recently, the Dangote Group raised the alarm over another Ponzi scheme in circulation alleging partnership between the “Dangote brand, Nestle, Cussons and other reputable food processing companies” in launching a multi-level marketing initiative that intends to “fight hunger, poverty and stop recession” by paying participants in food.
Most Ponzi schemes are run by faceless individuals who boldly disclaim any forms of liabilities on their websites. Indeed, it is believed that most of these schemes, although painted as distinct with different marketing pick-up lines, operations and branding, are actually run by the same set of individuals out of choice locations such as Dubai and the United Arab Emirates. Most of these chaps are young and digitally-savvy individuals, for whom the absence of the risk of discovery and legal consequences means a chance to float more of these dubious investment schemes.
Business Hilights is an online news channel conceptualized and structured to report and track on a daily basis; latest developments in critical business sectors to serve as a one stop news gateway for governments, foreign and indigenous investors.