Why Ponzi scheme thrives in Nigeria

Secondly, greed and high risk taking tendencies among some folks cannot be wished away. This has become obvious considering that Nigerians have high proclivity for greed and gambling. The “get rich quick syndrome” is innate in some of them. This acts as impetus that motivates their propensity to invest in Ponzi schemes like Umana-Umana, MMM, etc.

Closely related to this is the emotional instincts coupled with religious practices of some Nigerians. In this connection, the “ it is not my portion syndrome, I reject it” or blatant self-denial, or extreme optimism or gambling” come into play. These are some of the emotive or religious stimulants that some Nigerians who are members of some faith-based organizations rely on in order to carry on with such investments. Their faiths sometimes act as catalysts that lure them into such investments. Despite the fact that others before them have got their fingers burnt, there is this spirit that sometimes pushes them to believe that they will not suffer the same fate like their predecessors.

Ignorance or lack of knowledge about the scheme may be a contributory factor to the growth of Ponzi in Nigeria. It has been observed that many Nigerian investors lack the capacity and capability to interrogate the key performance indicators (KPI) of a company in which they want to invest. Some of them cannot even analyze the audited financial statements of the companies of their choice. Despite the fact that there are some financial advisers that can assist the investors at moderate costs, the investors will not contact them to render such professional services.

Endorsement of the Ponzi product or service has crept into our business life to the extent that it is increasingly becoming a powerful marketing tool these days. The social media is an effective platform being employed by their users. When the endorser (i.e. the promoter or sponsor) of a new product or service is a star artist or a renowned religious personality (with a massive followership) in the Nigerian society, it goes without saying that it may act as a weapon of mass mobilization of support for the product or service in question. This singular factor might have shaped the investment decisions of investors in the Ponzi scheme.

Furthermore, the impact of the social media might have aided the growth of Ponzi scheme in Nigeria. The fact that whenever you switch on your handset or computer, the advertisements of such a product or service prop up sometimes makes the investments more attractive and appealing. Meanwhile, some investors who fall victim of the scheme are attracted by the fact that they read or saw the advertisements online. However, they are oblivious of the fact that reading or viewing something online doesn’t make it authentic, or confer genuineness on the product or service.

Perhaps paying lackadaisical attention to regulatory pronouncements may be another factor. Some Nigerian investors pay little or no attention to their regulatory environment. For instance, both the CBN and SEC have been warning investors on the dangers of patronising Ponzi schemes in Nigeria. While some yielded the warnings, a large proportion of the victims did not. In the process, it was alleged by some analysts that a whooping sum of over N200billion was lost to MBA FX alone recently.

In conclusion, therefore, the Nigerian investing public needs to be circumspect whenever a new scheme emerges. As a rational investor, the cliché should be: “shine your eyes” or better still buyers beware (caveat emptor). This is imperative, given the fact that any fund lost by any investor in the scheme may not be easy to recover. After all, such financial dealing may be tantamount to an illegality in the first place, or akin to an investment misadventure wherein both the investors and the Ponzi scheme operators are considered suspects who may have violated some sections of the extant laws of the land.

Source: infodig.com.ng

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