Ever heard of a Ponzi Scheme? Of course, you have! As Nigerians, most of us love the idea of earning unrealistic returns on investments. This explains why Ponzi Schemes remain popular in the country, despite the disappointing aftermaths often associated with it.
Not too long ago, many people were entranced by the euphoria of MMM. Lured into the process by its many false promises, these people chose to ignore the red flags; precisely the fact that the entire scheme called MMM was premised on a false foundation.
And then in December 2016, everything came crashing down. Many people lost millions, including some newly-convinced participants who were gullible enough to fall prey.
Now here is the unfortunate thing — the fact that many people have gone ahead to participate in other forms of Ponzi Schemes since the collapse of MMM. Some notable examples of such schemes are Ultimate Cycler, Pennywise, HelpColony, and Dantata Success & Profitable Company, Twinkas, etc.
So, why do Nigerians keep falling victim to Ponzi Schemes?
Well, let’s just go ahead and clearly state it right here and now that people keep falling victim to Ponzi Schemes because they are greedy.
Last week Friday, our very own Ugo ‘Ugodre’ Obi-Chukwu, the Founder and Publisher of Nairanmetrics, asked a financial literacy question on Twitter which garnered a few comments that got us a bit worried.
According to Mr Obi-Chukwu, how much would you expect to be your minimum Return on Investment (RoI) per annum, should you invest the sum of N100,000?
If you have N100k to invest, what would be your minimum return on investment per annum?
Please state in percentages.
— Ugo Obi-Chukwu (@ugodre) February 7, 2019
Some of the responses were debatable
Majority of the comments that followed this question were simply unrealistic. Now, it is unclear whether some of these respondents were joking. However, considering the nature of the question, we believe they were serious with their responses.
It is, however, a debatable issue. This is because a number of those who expect very high RoI are expecting such from small trading businesses and not organised investments. Take for instance, Mr Mark Essien of Hotels.ng said he would anticipate an 80% RoI because there are some trading businesses that can be taken advantage of to this effect.
80%
— Mark Essien (@markessien) February 8, 2019
There are trading businesses that can do this. E.g Palm Oil Trading. Just eliminate middlemen as much as possible
— Mark Essien (@markessien) February 8, 2019
While this may seem very ambitious, it is important to note that Mr Essien was specific about the type of investment. And he was not the only one who shared this perspective. Another respondent, Fevent Magna, believes that retail food sellers can, indeed, earn even more than 100% RoI.
However, he warned that this would be unachievable to people expecting such returns from more organised forms of investment.
A retail seller of food products would achieve that and ROI may even be higher. Product's could be pasta, bread, fried yam/plantain. These are no go areas for the big pple but the masses are grinding out their income with even less principal.
— Favent Magna (@FaventM) February 8, 2019
But some were simply unrealistic
Somebody actually said he would expect 500% minimum Return on Investment on a N100,000 annual investment.
Per Annum?!
with N100k?!
Considering the value of the Naira these days and how quick it vanishes, for one whole year!
It would have to be 500% minimum to be worth the wait and toil.
— Efaña Henshaw (@PupilInvestor) February 8, 2019
250%
— Oluseyi (@OluseyiIdowu) February 7, 2019
Meanwhile, majority of the comments were realistic, with many expecting between 15% RoI to 40%.
Anything above TBills rate. Usually 12 – 15%. I think that's a good rule of thumb.
— Onaopemipo Dara (@monblaze) February 9, 2019
In any case, the need for Nigerians to be realistic with their investment returns cannot be overemphasised. This is important because as some respondents noted, greed is the only thing that fuels Ponzi Schemes. And Ponzi Schemes seldom augur well for a lot of people.
That's near impossible in this environment. If that happens, it's not sustainable.
— Akpifo Onome Ohwovoriole (@quansimodo) February 8, 2019
I love this.
Asides from the fact that this is well captioned, it is backed up with accessible data.
Keep it up, Team Nairametrics! ?