The current economic hardship in Nigeria brought about by the country slipping into its worst recession in decades has pushed many youths into engaging in dubious money doubling schemes.

The proliferation of such schemes continue despite the fact that regulatory financial institutions like the Central Bank of Nigeria, CBN, and the Securities and Exchange Commission, SEC, have issued countless warnings to the populace.

Although there are different variations of the schemes, known as Ponzi schemes, one thing they have in common is the promise of huge financial benefits for anyone who invests in them.

A Ponzi scheme is an illegal or fraudulent investment scheme where the person or organization running it pays returns to existing investors from capital paid into it by new investors, rather than profit actually earned by the company itself.

Typically companies running such schemes offer higher than usual profits.

Variations include the High Yield Investment Program (HYIP) which MMM Global falls under, in that it offers particularly high (even for a Ponzi scheme) returns, or as the name suggests, a high yield.

All Ponzi schemes have an underlying asset or enterprise upon which the investment is built, cash payout is sustained from contributions of investors who come in later.

With Nigeria sinking further into recession, youths and middle age adults have resorted to Ponzi schemes as a means of survival as it appears that the President Muhammadu Buhari-led federal government seems to be having a hard time battling with the economic decline.

In December last year, more than two million participants of the most popular of the ponzi schemes in the country, MMM, had their accounts frozen for a month over fears that the system will not be able to withstand the rush to withdraw funds to raise money for the yuletide period.

Although MMM did unfreeze the accounts on January 13, a day before it officially said it would, it has been one tale of woe to another for participants who say they are yet to recoup their investments from the scheme.

The continuous growth of the internet and social media means youths are the major targets of ponzi schemes operators because they are more accessible than other demographics of the population.

Because of the need for anonymity, ponzi schemes usually maintain websites with vague ownership structure. In instances where an owner’s name is provided they are usually fictitious as is the case of Peter Wolfgang of the Ultimate Cycler Fame or operating out of the country like Sergei Mavrodi of MMM.

Although the government have warned the youths about participating in Ponzi schemes, a ban is yet to placed on the activities of the schemes nor have they been officially declared illegal.

One troubling thing is that while the likes of MMM, Ultimate Cycler, Givers Forum, iCharity, GetHelpWorldWide or Zarfund may be the talk of the town, other Ponzi schemes are fast emerging even though they are not as widely known.

A curious visitor to any popular page on Facebook or the different blogs will see that the comments sections are flooded with messages advertising one scheme or the other to youths. The copy cat ponzi scheme, NNN Nigeria, has even trended several times on Twitter in the past few weeks with many young people already lining up to join.

The questions that comes to mind now is if these schemes are sustainable why aren’t the promoters approaching regulatory agencies for licenses? History has a curious way of repeating itself and many young people have refused to learn.

In the late 2000s, there were get-rich-quick schemes that made away with several millions of Naira in investors funds and many of those people never recovered. MMM Nigeria investors are still waiting to recoup their money more than two weeks after the scheme ‘resumed’ operations. Since most of these digital Ponzi Schemes are being run by ex and current MMM Global members who might have ‘stolen’ the source code of the scheme, the same fate that befell MMM investors also awaits investors of these other mushroom schemes.

SEE ALSO: GREED OR RECESSION? How Ponzi Schemes Have Skyrocketed The Rate Of Unemployment Among Young Nigerians [OPEN]

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The post This Unholy Alliance Between Nigerian Youths And Ponzi Schemes [OPEN] appeared first on The Sheet.

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