{"id":6597,"date":"2022-01-26T14:36:55","date_gmt":"2022-01-26T13:36:55","guid":{"rendered":"https:\/\/cowrywise.com\/blog\/?p=6597"},"modified":"2023-03-12T14:30:29","modified_gmt":"2023-03-12T13:30:29","slug":"ponzis-in-nigeria","status":"publish","type":"post","link":"https:\/\/cowrywise.com\/blog\/ponzis-in-nigeria\/","title":{"rendered":"How Ponzi Schemes Messed Up How Nigerians Think About Investments"},"content":{"rendered":"\n

You\u2019re more greedy than you like to admit<\/strong><\/h2>\n\n\n\n

Nobody likes to think that they\u2019re greedy, but in certain circumstances, you have the tendency to display a level of greed that will shock even you.<\/p>\n\n\n\n

Just a few months after the MMM saga in 2016, a friend reached out to me about an \u201cinvestment\u201d she was considering; the name was Loom. I remember how hard I tried to convince this person that it was a scam. But as they say, my words \u201centered the right ear and immediately came out of the left ear\u201d.<\/p>\n\n\n\n

The \u201cinvestment\u201d capital required for Loom was \u20a613K and in less than a week, the \u201cinvestor\u201d was going to earn about \u20a626k \u2013 a whopping 100% increase in just 7 days. It was ridiculous to me but the voice of greed was louder in my friend\u2019s ear. Worst part? The money she intended to put in was not hers. <\/p>\n\n\n\n

Imagine going into debt to be able to invest in a scam. <\/p>\n\n\n\n

Did it yield returns?<\/strong><\/h2>\n\n\n\n

I followed up after a few months and obviously, nothing came out of it. My friend did not get \u20a626k and never got her \u20a613K back too. Thankfully, she wasn\u2019t so devastated \u2013 after all, it was just \u20a613K.<\/p>\n\n\n\n

Though I do not know others who put money in Loom, it is very possible that many people put their life savings into it, even after everything they previously heard about MMM.<\/p>\n\n\n\n

We can blame this way of thinking about investment returns on ignorance (and it is true that some people genuinely do not know how investments work) but I\u2019ll like to blame greed.

People are more greedy than they like to admit.<\/p>\n\n\n\n

How did Ponzi schemes start?<\/strong><\/h2>\n\n\n\n

Charles Ponzi is to blame. He started the fraudulent initiative of creating pyramid schemes where investors are paid high \u201creturns\u201d in a short time frame with other investors’ money.<\/p>\n\n\n\n

According to biography.com<\/a>, \u201cCharles Ponzi was the infamous swindler who paid out returns with other investors’ money. The “Ponzi scheme” is named after him. After running a highly profitable and expansive investment scheme, Ponzi was arrested on August 12, 1920, and charged with 86 counts of mail fraud. Owing an estimated $7 million, he pleaded guilty to mail fraud, and subsequently spent 14 years in prison\u201d.<\/p>\n\n\n\n

\"About<\/a><\/figure>\n\n\n\n

Ponzis in Nigeria vs Blood Money – which is worse?<\/strong><\/h2>\n\n\n\n

I recently had a conversation with another friend and apparently, he was also a \u201cvictim\u201d. <\/p>\n\n\n\n

In his case, he was still a University student and the name of the investment was ICharity. What a terrible name! Their headquarters was on WhatsApp. This friend \u201cinvested\u201d \u20a610K the first time and in under 6 hours, he had received an alert of \u20a620K \u2013 100% returns the same day. <\/p>\n\n\n\n

He shared a funny story of how he \u201cpacked\u201d the \u20a620K that had been sent to him, added \u20a620K to it and \u201creinvested\u201d \u20a640K.<\/p>\n\n\n\n

He knows someone who borrowed \u20a6100K from his mum and ended the conservation laughing as he said \u201cexcept we get the money tomorrow oh. Because that was the end. They took our money and left us in the WhatsApp group to fight each other\u201d. LOL!<\/p>\n\n\n\n

It\u2019s funny, but it\u2019s actually not funny at all. <\/p>\n\n\n\n

There are many more stories and in every single one of them, it looks like the \u201cinvestors\u201d could clearly see that what they were taking part in was \u201cblood money\u201d. As is the case in Nigerian movies \u2013 with these kinds of investments, you put in something and get exponentially more than that in a few hours or days.<\/p>\n\n\n\n

Ponzis in Nigeria and blood money have something in common, they\u2019re both out to promise the impossible.<\/p>\n\n\n\n

But legitimate investments don\u2019t work that way.<\/p>\n\n\n\n

When will the fight between investments and Ponzi end?<\/strong><\/h2>\n\n\n\n

Thousands of people have had their consciences roasted by Ponzi schemes. They were told they were \u201cinvesting\u201d but what they were really doing was empowering \u201cmoney doublers\u201d. <\/p>\n\n\n\n

Ponzis in Nigeria have made it tougher to educate people on how investments work. Too many people are looking for \u201cget rich quick schemes\u201d and it is because of the likes of MMM, Loom and ICharity.<\/p>\n\n\n\n

How are investments different from Ponzis?<\/strong><\/h2>\n\n\n\n

An investment is an asset that generates an increase in value over a period of time. The time factor is critical in determining if something is an investment or Ponzi.<\/p>\n\n\n\n

A Ponzi, according to Oxford Languages<\/a>, is a form of fraud in which belief in the success of a non-existent<\/strong> enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.<\/p>\n\n\n\n

Investments and Ponzi schemes are worlds apart. The first is for those who want to make generational wealth, the latter is for greedy people looking to double money in the shortest time and it eventually ends in premium tears. <\/p>\n\n\n\n

In addition…<\/h2>\n\n\n\n