Experts on Why Nigerians Fall for Ponzi – and Safer Ways to Invest
Six promoters of the recent Ponzi scheme, CBEX, which allegedly swindled unsuspecting Nigerians out of over $1 billion, have been marked for arrest following a ruling by Justice Emeka Nwite of the Federal High Court, Abuja.
The Economic and Financial Crimes Commission (EFCC), in a motion, sought arrest warrants and a remand order for six promoters of the scheme. The individuals named are Adefowora Olanipekun, Adefowora Oluwanisola, Emmanuel Uko, Seyi Oloyede, Avwerosuo Otorudo, and Chukwuebuka Ehirim.
CBEX, a cryptocurrency platform, claims users can trade digital assets like Bitcoin, Ethereum, and other cryptocurrencies with 99% accuracy using its Artificial Intelligence (AI) technology. The allure of high returns—typically a red flag—has become a go-to strategy for most Ponzi schemes that have thrived in Nigeria, from MMM to MoneyCycle. This trend reflects the widespread lack of financial literacy, which makes many Nigerians susceptible to fraud.
According to Prisca Johnchris, founder of Kristle Invest, a platform that helps “everyday Nigerians understand how to grow their money wisely,” the main reasons people fall for such scams are a get-rich-quick mindset and lack of financial literacy.
“In my experience working with aspiring investors through Kristle, I believe the major driver behind the rise of Ponzi scheme victims in Nigeria—especially in the case of CBEX—is a mix of the get-rich-quick mindset and a lack of financial literacy, often amplified by economic hardship,” she told Neusroom.
In a country where many grapple with rising living costs and underemployment—with the minimum wage below $46, one of the lowest in Africa—seeking alternative, sometimes risky, sources of income becomes an option for survival.
According to Johnchris:
“Many people are under immense pressure to improve their financial situation quickly. But when you combine that desperation with limited investment knowledge, they become easy targets for schemes that promise unrealistic returns.”
Supporting her view, Emmanuel Adetayo, a financial analyst with one of Africa’s fastest-growing companies in 2023, added that while poverty plays a role, greed and a lack of proper financial education are also major contributors.
“It’s true there’s poverty and people are looking for quick ways to make money, but greed also plays a major role in why people invest in Ponzi schemes,” Adetayo said.
“Many are not investing just to make an extra buck for a meal, but because they want to double large sums of money.”
Between 1999 and 2023, Nigerians lost over ₦911.45 billion to Ponzi schemes—with ₦300 billion lost in just the five years following the collapse of MMM in 2016.
“One key concept people often miss is understanding the idea of the risk-free rate of return, which currently stands at around 16% per annum through government instruments like the FGN Savings Bond,” Johnchris noted.
She also offered four legitimate ways Nigerians can invest and earn passive income:
- Dividend-Paying Stocks (Nigeria & U.S. Stock Markets):
These are shares of companies that regularly pay part of their profits to shareholders as dividends. In Nigeria, examples include MTN Nigeria, Zenith Bank, GTCO, and Dangote Cement.
On April 24, Guaranty Trust Holding Company (GTCO) Plc paid a total dividend of N8.03 per share for the financial year ending December 31, 2024.
A recipient, who wished to remain anonymous, said, “I don’t usually choose stocks based on dividends, but yesterday’s alert changed my perspective. I’m now looking forward to investing more in dividend-paying stocks.”
To invest in Nigerian stocks, Nigerians can use brokers like Cardinal Stone, Afrinvest Securities Limited, or FBNQuest Securities Limited, among others. For U.S. stocks, platforms like Trove and Bamboo offer access to dividend-paying companies like Coca-Cola, Johnson & Johnson, and Procter & Gamble.
- Mutual Funds and ETFs (Exchange-Traded Funds):
Mutual funds and ETFs pool money from multiple investors and are managed by professionals who invest in diversified assets like stocks, bonds, or commodities.
Mutual Funds are actively managed. Neusroom checks shows that on Cardinal Stone, their Money Market Fund offers around 19.08% yield, while Stanbic IBTC offers 20.72%.
ETFs, like SPDR S&P 500 ETF (SPY) and Vanguard Total Stock Market ETF (VTI) in the U.S., are passively managed and ideal for beginners due to their low risk and diversification benefits.
- Government Bonds (e.g., FGN Savings Bond):
Government bonds are low-risk investments where individuals lend money to the government and earn interest.
In April 2025, the FGN Savings Bond offered 16.046% per annum for the two-year bond and 17.046% for the three-year bond.
FGN Savings Bonds are issued monthly by the Nigerian government and open to individuals with as little as ₦5,000.
- Real Estate or Digital Products:
Investing in land, rental properties, or short-let apartments for long-term appreciation or consistent income remains a profitable option. According to Statista, the Nigerian real estate market is expected to grow at a 6.87% CAGR between 2025–2029.
For those with creative or technical skills, digital products like eBooks, online courses, design templates, and stock photography can also generate passive income.
“Each of these options requires some level of financial education and due diligence, which is why platforms like Kristle Invest focus on helping everyday Nigerians understand how to grow their money wisely,” Johnchris added.
