Ponzi Schemes: An Analysis on Coping with Economic Recession in Nigeria

Abstract

The proliferation of Ponzi schemes in Nigeria appear to coincide with the official declaration of economic recession in early 2016. It is therefore pertinent to empirically investigate the nexus between the recession and Ponzi schemes in the country. Anchored theoretically on Robert Merton’s Strain Theory the study was guided by two research objectives and one hypothesis. The snow-balling sampling technique was used to select 135 Ponzi scheme participants from Rivers, Bayelsa and Anambra States. Descriptive analysis of the results was undertaken in tables, charts and graphs. The findings revealed amongst others that MMM, Ultimate cycler, Givers Forum, Get Help World Wide were the major Ponzi schemes in Nigeria. It was also found that Ponzi schemes are a coping strategy for economic recession. The paper posits that until the economic downturn is adequately addressed and the economy revamped, Ponzi schemes would continue to thrive in Nigeria. It recommended economic revitalisation through effective economic diversification policies that will enhance provision of socio-economic livelihood as palliatives to recession induced strain.

Financial frauds’ victim profiles in developing countries

“…Indian victims are looking for extra money to improve their standard of living or to build their financial base to improve their economic conditions. In addition, the economic conditions and poverty encourage the existence of financial frauds in Nigeria as victims are looking to improve their standard of living ( Jack and Ibekwe, 2018 ). In contrast, lack of empathy for other investors and greed are factors that support the tendency of being attracted by financial frauds in China, Nigeria and Latin America.…”

Financial literacy and awareness of investment scams among university students

“…The pressure to achieve financial goals drives the victims to join the fraudulent investment scheme because they want to be rich and receive fast and easy money (Ullah et al, 2020). Young generation are likely to become the victims and participate in investment scams rather than the older generations since they are more exposed to the latest technology and internet facilities (Jack and Ibekwe, 2018). This is due to the young generation are more enthusiastic to invest leading them to carelessly join investment scams without considering the risks.…”

A Socio-Historical Perspective on Ponzi Schemes and Development in Nigeria: The Role of the Christian Church

“…He enticed investors by promising extraordinarily high returns of 50% in 45 days (Stelter, Berger, Odewald & Schilder 2013). Instead of using the money to buy the coupons and exchange them for postage stamps, the money of later investors was used to pay returns to earlier investors, thereby extracting huge profits along the way (Jack & Ibekwe, 2018). With the advent of Mavrodi Mondial Movement (MMM) in Nigeria in November 2015, there had been an astronomical rise in the number of Ponzi schemes in the country with some lasting for a couple of months, while others crash in a couple of days or even hours.…”

“…The end product of anything Ponzi is to technically and tactically steal from the innocent but greedy persons who are mostly new investors/participants. It is no news that many participants/investors lost a large sum of money to the MMM scheme (See Asogwa et al 2017;Jack & Ibekwe, 2018;Obamuyi et al 2018). This means that their money was stolen by the owner(s) of the scheme, which is totally frowned at by the biblical injunction that says: "Thou shalt not steal" (Exodus 20:15).…”