About five years ago, I had a conversation that stuck with me till today.
A lady I knew was gushing about an “investment opportunity” she had discovered. She eagerly explained the jaw-dropping returns, something north of 15% monthly.
Instantly, I told her: “This is a Ponzi scheme.”
She nodded in agreement.
“I know,” she said without flinching. “The returns don’t even make sense. But the money is too good to ignore. I’ll risk it.”
Eventually, like every Ponzi story, it collapsed.
She lost part of her money, but interestingly, she still made a net gain before the end came crashing down.
It wasn’t the only encounter that opened my eyes.
Another friend once invested in a so-called “microfinance fixed deposit scheme.” The pitch?
The microfinance owner supposedly hacked the business model by lending to market women at super-high interest rates and delivering investors incredible returns—10% monthly, consistently, for years.
I warned him too: “If he could generate those returns safely, why would he need your money? Banks would gladly lend him cheaper funds.”
Again, the end came.
The scheme unraveled. Billions of naira vanished.
One of my friends had just “rolled over” N80 million when the whole thing collapsed.
The microfinance founder, initially a legitimate entrepreneur, got swallowed by the scale of his promises and started recycling investor deposits. After months on the run, he was eventually caught.
Stories like these are not isolated. From Nospetco to MMM to the latest CBEX crypto scandal, Ponzi schemes in Nigeria continue to mutate only the wrappers change.
And as you’re reading this, chances are, there’s another Ponzi scheme thriving somewhere, promising “guaranteed” wealth to a new set of eager believers.
But here’s the uncomfortable truth we often ignore, many victims of Ponzi schemes are not exactly naive.
They see the red flags.
They smell the rot.
They understand the risks.
Yet, they go in anyway.
This is not to say that there aren’t unsuspecting victims there are, and we must protect them. But for the majority, greed, not ignorance, is the primary driver.
The psychology of ignoring red flags, interestingly, studies back this up.
A 2018 study by Onoh and Eze found that higher education does not shield people from Ponzi schemes. The better educated sometimes fall faster because they feel “too smart” to lose out. Greed makes people throw rationality out the window.
Another 2024 research paper published by Berjaya University revealed that even people who had previously lost money in Ponzi schemes were still willing to invest again. They knew the risks. They had tasted the losses.
Yet greed measured using the Heintzelman Greed Scale, still pulled them back in. In simple terms: they knew better, but they didn’t do better And that’s the paradox.
So who is to blame?
Every time another Ponzi blows up, the usual suspects are lined up:
- Government agencies
- SEC
- Banks
- Advertising regulators
Indeed, regulators have a role to play.
Insiders at the SEC reveal plans to introduce a simple SMS verification system so that Nigerians can quickly check if an investment scheme is registered.
Government, banks, and even private businesses must step up too.
It’s baffling that Ponzi schemes operate openly with offices, billboards, radio ads, and even corporate bank accounts.
KYC (Know Your Customer) rules should ordinarily flush these out. Banks accepting large sums without verifying source and purpose have questions to answer.
Billboards advertising dubious schemes should never be approved. TV and radio stations promoting fraudulent investments should bear some responsibility too.
Perhaps it’s time for the SEC to issue clearer guidelines for banks, media houses, and businesses. If you’re caught enabling an unlicensed scheme intentionally or not you should face penalties.
But even if all these are in place, let’s be brutally honest, Ponzi schemes will never fully die.
Why? Because no regulation can completely extinguish greed.
Greed, the fuel that Ponzi schemes run on. You see, Ponzi schemes are not just financial traps. They are emotional traps.
Studies show that Ponzi operators use a three-pronged strategy to reel people in:
- Appeal strategy – They promise unusually high returns with little or no risk, tapping into your deepest fantasies about quick wealth.
- Business model imitation – They dress up like real businesses. They’ll register fancy companies, have websites, and official-looking offices, and use professional images that mimic legitimate enterprises.
- Execution strategy – They deploy affinity marketing.
Your friend, your brother, your pastor, or your colleague becomes the ambassador, encouraging you to invest because “I have seen it work.”
Trust networks become their greatest weapon.
Add Nigeria’s tough economy and natural hustle mentality to the mix, and you have the perfect breeding ground.
Where do we go from here? If we are serious about reducing the endless cycle of Ponzi victims, we must prioritize investor education.
Campaigns must go beyond Twitter posts and Instagram flyers. They should start in schools, workplaces, churches, and markets.
Banks should actively flag unusual inflows, and report suspicious activity, not just when law enforcement knocks on their doors.
People should be encouraged (and perhaps mandated) to double-check schemes through easy tools, such as the SEC SMS system.
Above all, we must have honest conversations with ourselves;
- If it looks too good to be true, it is.
- No one, repeat, no one, is giving away 10% monthly for nothing.
- No “investment” can beat normal market returns consistently without extraordinary risk.
Until we face the real enemy, our unchecked greed, Ponzi schemes will continue to thrive.
Because at the heart of every scam, beneath every collapsed dream, lies not just a cunning fraudster…but a willing believer who chose fantasy over logic.
