By Christopher Odey
The arrest of the Chief Executive Officer of Ovaioza Food Produce Storage Business, Imu Ovaioza Yunusa, by the police authorities for swindling investors of over N3 billion and the discovery of about five other Ponzi scheme operators signify how gullible some Nigerians are. The fact that a good number of Nigerians still fall for the antics of fraudsters cheaply in this age and time speaks volumes of their greed, gullibility and get rich at all cost propensity.
That these schemes still do business in the country without hassles is proof that either the financial/investment sector regulatory authorities have failed in their responsibility to properly educate the populace on financial literacy or the people have refused to learn, blinded by greed. The damage these schemes can and are inflicting on members of the society requires a determined regulatory response to shut them down at an early stage, before they gain momentum.
The business opportunity these scammers advertise to lure investors can vary. For instance, the recent case of Yunusa who scammed tens of people, created a partnership plan that guaranteed investors a 70-80 per cent return on investment while keeping them up to date on their investments on her verified Facebook page. By that, she gained attention and confidence from potential investors.
Apart from the widespread hunger and stack greed that force many people to indulge the unscrupulous army of scammers, most Nigerians need to take an intensive enlightenment in financial literacy and investment opportunities to, at least, safeguard themselves as well as reduce their vulnerability.
Available reports indicate that the scammers engage all forms of lies and promises to investors of high returns on their investments in the short term with little or no risk, but in fact does not make any legitimate investments that produce income. The Ponzi schemes have made life perilous and drab for many.
This newspaper was reliably informed that they usually have to attract new investments at an exponential growth rate to sustain payments to existing investors, and inevitably collapse when the new investment needed exceeds the ability to lure further contributors. At that point, most investors lose their money, although early investors—including the scheme’s founders—may have realised high returns or extracted windfall rents if they cashed out soon enough.
We are worried that with the prevailing economic crisis, manifested in high-rate poverty, insecurity, unemployment and all forms of immorality across the country, these ubiquitous Ponzi schemes pose major challenge to the nation’s financial system, with a concomitant implication on its investable opportunities. Nigeria is already suffering a drift in foreign direct investment. According to the National Bureau of Statistics (NBS), Foreign direct investment into Nigeria fell by $331.2m to $698.78 million in 2021, from the total sum of $1.03 billion recorded in 2020.
While we acknowledge that the Securities and Exchange Commission (SEC) has done a little sensitisation about the Ponzi schemes, the mechanism behind the schemes needs to be outrightly prohibited and treated as illegitimate investment across Nigeria. SEC must go beyond the mere public notice on its website and thoroughly deploy all forms of publicity, including radio and television jingles, newspaper advertisements and massively deploy full force on all social media platforms to sensitise the public on the dangers associated with instant profit-offering business now preying on their ignorance.
The Central Bank of Nigeria (CBN), on its part, has consistently warned Nigerians about the risks involved in patronising Illegal Financial Operators (IFOs) which Ponzi schemes are a major part of. The apex bank said the operators of these schemes carry out their nefarious businesses of extorting money from unsuspecting members of the public with a promise of high yields that will remain what it is, false promise.
As the apex bank pointed out, Nigerians have a role to play in stopping some of these institutions operating illegally and insisted that the nation must be conscious of any institution that begins to ask prospective investors to bring their money with offers of outrageously high interest rate.
Nigeria is one of the few countries where Ponzi schemes still thrive unhindered. With the bitter pills of MMM experience still much in the mouths of many Nigerians, it is indeed baffling to know that most people have not learnt their lessons. Whatever it is that is associated with ‘get rich’ mentality of many Nigerians, this newspaper believe that serious measures must be taken to restrict the registration of those fraudulent companies in Nigeria. It is even more worrisome to know that Ovaioza Food Produce Storage Business is a company registered with the Corporate Affairs Commission (CAC).
In the meantime, we recommend that due diligence be done on the persons behind the registration of such high-profile companies before they are accredited to carry out business operation, especially those with a licence to conduct financial transactions.
We challenge the various anti-graft agencies to conduct forensic investigation into the process and outcome of Ponzi schemes in Nigeria from the onset and stop them from festering before they become monsters. All those found culpable of defrauding vulnerable Nigerians, including Yunusa must be severely punished in line with the relevant laws to serve as deterrent to those who maybe nursing such ambition.
