The year is 2021, I‘m sitting in my office, talking to my mom on the phone. She tells me a friend just introduced her to yet another investment opportunity and she feels strongly about it this time. The ‘investment company’ has an office in Lekki, the business seems legit and she trusts the friend that introduced her to the business. “Mom, oh please, don’t even go down this road again. Have you gotten the money you invested in other investment businesses recently?”, I ask. “My friend will you shut up! No one ever made it without trying.”, she responds.
Against my advice, mom goes ahead to invest with this company, and a few weeks later, it ends in tears.
The CEO of the company flees with company funds and EFCC is out for him. To make matters worse, the company is now completely shut down.
From MMM to Loom and a host of other Ponzi schemes, Nigerians have continued to fall prey to investment scams.
Between 2015 and 2021, Nigerians reportedly lost about N300 billion to investment fraud. To put in proper perspective, this is more than the revenue generated by some states in Nigeria. The reason for this remains a mystery, a mystery yet to be resolved.
Could it be a lack of due diligence or are Nigerians purely driven by greed and the urge to make quick money? Let’s see;
Greed and Impatience
If you guessed greed as a reason Nigerians keep falling for investment scams, you are right. Because of how much power the society ascribes to wealthy people, most Nigerians are never content with how much they have. They always want more – more money, more power and they want it quick. Sometimes, people often get too consumed by greed that they barely think before deciding what to invest in. They only care about what appears will earn them fast money.
We all know that Ponzi schemes, for instance, are a bubble, yet, people choose to invest in them hoping to make some quick profit or, ‘cash out’ early enough. Most times, investment scams can be clear as daylight but greed pushes some people so much that they end up losing their entire money.
The State of The Nigerian Economy
The poor state of the Nigerian economy is another reason Nigerians fall victim to investment scams. With rising inflation, people are seeking ways to double their money. This is further worsened by low-interest rates which make other investment opportunities unattractive. Therefore, it is not surprising most people are attracted to investments with high returns which end up being scams.
Lack of Financial Education
Due to a lack of financial education, many Nigerians make investment decisions based on recommendations from people they trust and respect not from financial experts. Celebrities for instance, with no financial expertise, openly endorse and promote investment schemes on their platforms, leading people to invest in them. A good example is a Ponzi scheme that was advertised by some celebrities on their social media platforms recently. This prompted a lot of Nigerians to invest in it and they ended up being defrauded of their hard-earned money.
True wealth does not come in one day, it takes time to build – it is important to understand that.
Avoid investment schemes that claim to offer more than 30% returns in 2 months or even 12 months. Don’t invest in what you do not understand! The cure to ignorance is enlightenment.
Arm yourself with knowledge and invest wisely with zimvest.