Ponzi Schemes: The Dangerous Allure of Quick Returns
By Obinna Emelike and Taofeek Oyedokun
April 20, 2025
In Nigeria, the financial landscape has been marred by the proliferation of Ponzi schemes that prey on the hopes and desperation of ordinary citizens. As stories of lost investments emerge, it becomes evident that many people are searching for quick returns amid challenging economic conditions.
The CBEX Collapse
A recent case study in this ongoing crisis is the collapse of CBEX, a digital trading platform that promised investors a staggering 100% return within just 30 days. Launched in July 2024, CBEX operated without registration from the Securities and Exchange Commission (SEC) and was ultimately exposed as a classic Ponzi scheme, using the funds of new investors to pay returns to existing ones.
One victim, Yetunde Olakunle, invested N700,000, her life savings intended for restocking her grocery store, in the hopes of receiving N1.4 million by the end of April. Just three weeks later, her investment vanished, leaving her devastated and without funds to support her business.
“I wanted to restock the store, add new products, and boost my business. Now, I am back to zero,” Yetunde lamented.
Similarly, Uloma Anyadike, who invested N1 million into a Lagos-based Ponzi operation named Mega Pay, found herself embroiled in legal disputes after the scheme abruptly ceased operations, robbing her of her investment and her dream of acquiring a modern oven for her bakery.
A National Epidemic
According to the Nigeria Deposit Insurance Corporation (NDIC), Nigerians have suffered losses exceeding N911.45 billion to Ponzi schemes over the past 23 years. The infamous MMM scheme, which collapsed in 2016, alone cost investors N18 billion. The recent CBEX scheme, however, has reportedly eclipsed that figure, with losses estimated at N1.3 trillion by April 2025. As financial desperation grows in Nigeria, so does the appeal of these fraudulent schemes. With rising prices and declining purchasing power, the promise of quick cash becomes increasingly enticing. According to Samson Simon, an economics lecturer at Baze University, the current cost-of-living crisis has made many Nigerians more susceptible to deceptive investment opportunities.
“Ponzi schemes tend to be most popular when people are in the throes of chronic economic malaise,” Simon said. “The rationality behind investing in these schemes can stem from a mix of economic hardship, low financial literacy, and desperation for survival.”
The Role of Financial Literacy and Regulation
Despite the alarming statistics, many citizens continue to lack the knowledge necessary to identify fraudulent schemes. Entrepreneur Juliet Anazodo emphasized that societal attitudes towards wealth can exacerbate the issue. She noted that values celebrating financial success, regardless of the means, provide fertile ground for Ponzi operators.
As the government grapples with regulatory responses, critics argue that the measures employed are often too slow to be effective. Chijioke Umelahi, an Abuja-based lawyer, pointed out the lessons that should have been learned from the past failures of Ponzi schemes like MMM. He stated, “If more Ponzi schemes are still operating today, it means our government and its agencies did not learn anything from that sad reality.”
In response, the Economic and Financial Crimes Commission (EFCC) has reported that it was monitoring CBEX prior to its collapse and is conducting investigations to track down its masterminds. The SEC has also taken action, issuing cease-and-desist orders against unregistered platforms like CBEX and forwarding their cases to the EFCC. Under the revised Investment and Securities Act (ISA) 2025, Ponzi scheme operators could now face up to 10 years in prison and hefty fines.
Looking Forward
Despite these regulatory frameworks, many, including economist Samson Simon, believe that the government needs to adopt a more proactive approach to tackle Ponzi schemes. “It should go beyond warnings to taking swift action to shut these schemes down before they spread,” Simon suggested.
For victims like Yetunde and Uloma, mere promises of justice are insufficient. As Yetunde expressed, “I just want my money back.” The broader implications of such schemes continue to unfold, leaving financial instability in their wake and raising questions about the government’s commitment to addressing this persistent challenge.
Until systematic education on financial literacy combines with strict enforcement and a tackling of poverty at its roots, the cycle of investment fraud will likely continue, leaving many Nigerians caught in its web of deceit and despair.
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