Why Ponzi Schemes Continue to Thrive in Nigeria

Ponzi schemes continue to flourish in Nigeria due to a combination of regulatory shortcomings, widespread financial illiteracy, economic challenges, and the strong desire among investors for quick, high returns. Although regulatory frameworks like the Investment and Securities Act 2025 (ISA 2025) have introduced stricter penalties and enhanced investor protections, enforcement remains insufficient to fully deter fraudsters. The slow pace of prosecuting offenders gives scammers room to operate and recruit unsuspecting victims.

Social media and digital finance platforms have amplified the reach of these schemes, making it easier for perpetrators to target a broad base of Nigerians who are eager to grow their income amidst economic uncertainty. Many schemes utilize referral-based or multi-level marketing models, which exploit existing trust within personal networks, making it harder for victims to suspect fraud. This targeted approach often lures people with promises of unrealistic and attractive returns.

Additionally, the limited availability of formal, accessible investment opportunities drives many Nigerians toward these risky schemes out of desperation or lack of better alternatives. Despite efforts by regulatory bodies such as the Securities and Exchange Commission (SEC) and the Economic and Financial Crimes Commission (EFCC) to identify and shut down fraudulent platforms, many investors remain unaware of how to verify legitimate investments. This knowledge gap, combined with economic hardship and infrastructural challenges, creates an environment where Ponzi schemes can repeatedly take root, resulting in substantial financial losses and undermining trust in the financial system.