By Marcel Okeke

This treatise is motivated by a nauseating trend in Nigeria in which thriving fraudulent investment schemes (Ponzi) have become resistant to the efforts of regulatory and law enforcement agencies to checkmate their ‘invasion’ of the Nigerian economy. Three months after the Economic and Financial Crimes Commission (EFCC) alerted Nigerians on the activities of “58 companies” operating as Ponzi schemes (March 2025), the Securities and Exchange Commission (SEC) has come up with another list of “79 suspected Ponzi schemes.”

The sprouting of these illicit schemes and the damaging impact of their activities on the Nigerian economy have warranted an update on my earlier piece captioned: ‘Nigerian Economy: A Breeding Ground for Ponzi Schemes?’ published in June. From a list of 58 Ponzi schemes released by the EFCC early in March 2025, the number has spiked to 79 by July as published by the SEC. This is a jump of over 35 per cent in three months!

At this pace of accretion, the number of these illicit investment outfits could hit over a hundred by 2026, a pre-election year—when unscrupulous politicians would desperately be laundering money to fund their electioneering. Politically exposed persons (PEPs) have been linked with illicit funds flows (IFF) via Ponzi schemes as conduits for money laundering. This is according to the EFCC’s recent findings.

In its latest onslaught, SEC says it has launched an investigation into “79 suspected Ponzi schemes” across Nigeria, warning that “those found culpable will face severe legal consequences, including prosecution under the Investment and Securities Act (ISA).” But, as it were, the Ponzi scheme promoters and patrons are neither fazed nor deterred by the threats from the regulators & Co.

This resistance or aversion to proper regulatory approvals and oversight by the Ponzi schemes is rooted in a number of socio-economic and financial environmental factors in the country. In this regard, I shall cull copiously from my earlier treatise: ‘Nigeria: A Breeding Ground for Ponzi Schemes?’

“This trend, in recent times, has seen the mushrooming of the investment scams in the country, with many crashing, taking billions of investor funds down the drain. This is in spite of the efforts of regulatory agencies to monitor, regulate, and regularize the operations of these illegal investment outfits.

“Recently, the Economic and Financial Crimes Commission (EFCC) published a list of “58 companies posturing as investing entities and defrauding innocent Nigerians of their hard-earned money.” According to the EFCC, these companies were neither registered with the Central Bank of Nigeria (CBN) nor the Securities and Exchange Commission (SEC), as required by law.

“The question is: if at one point in time, the EFCC could make a list of as many as 58 companies “posturing as investment entities” without proper registration, is such a list really comprehensive? How often is this kind of list publicized? Why are these Ponzi schemes still mushrooming in the country, even under the searchlight of the EFCC, the CBN and SEC?

“While the patrons of these Ponzi schemes cannot be exculpated for their greed and/or ignorance, the incentive for the massive springing up the investment scams lies largely in the Nigerian environment. Given normal risks in investment, every investor is usually driven by the rate of returns, ceteris paribus.

The Ponzi schemes are usually floated by dubious characters; who, more often than not, would be out to launder illicit funds. The suspicion of the massive presence of such funds in the Nigerian environment made the Financial Action Task Force (FATF), on February 24, 2023, to place the country on the ‘FATF Grey List.’

FATF is the global body established in 1995 to lead international action to combat money laundering, terrorism, and arms financing. But, since two years ago, Nigeria has been placed on its ‘Grey List’ due to “increased capital inflows and deficiencies in combating money laundering, terrorism, and arms financing.”

Without a doubt, this type of Nigerian environment, as described by FATF, is a breeding ground for Ponzi schemes, and other bodies that aid illicit funds flow (IFF) globally. This places a huge question mark on the capacity, competence and commitment of the relevant regulatory agencies in the country.

If the EFCC and SEC did not publish lists of Ponzi schemes operating in the country at two different times, who would believe that there could be so many of them? The EFCC itself has linked the Ponzi schemes to the activities of politically exposed persons (PEPs) in Nigeria, who mostly engage in money laundering.

EFCC Chairman, Ola Olukoyede, who made the disclosure in Abuja recently, said “PEPs in Nigeria are using internet fraudsters, popularly known as ‘yahoo-yahoo boys’ to launder billions of Naira in stolen public funds into offshore accounts.” He said the “involvement of politicians in these illicit activities highlights systemic corruption within Nigeria’s political and governance systems.”

The EFCC boss said: “When these PEPs steal money in billions, they give it to these boys; they open crypto wallets, and from there, the money goes abroad.” Incidentally, the crypto wallets are owned and operated by Ponzi schemes, floated by ‘faceless’ entities.

This explains why, even after its recent on-site assessment visit to Nigeria, FATF opted to withhold immediate removal of Nigeria from its ‘Grey List.’ The Nigerian Financial Intelligence Unit (NFIU), which coordinates Nigeria’s efforts under the FATF International Cooperation Review Group (ICRG) process, only hopes Nigeria will soon exit the List.

With EFCC’s revelation of the involvement of ‘powerful’ politicians in the IFF, using the Ponzi schemes and the ‘yahoo-yahoo boys’, it gets obvious why the illegal investment outlets are mushrooming in Nigeria. Currently, on its part, SEC is deep into probing FF Tiffany, and others of its ilk in the investment scam. SEC says in a statement that “preliminary findings suggest many of the schemes promised unusually high and unrealistic returns, leading to losses running into several billions of naira.”

The capital market regulator described the trend as “a grave threat to investor-confidence and stability of Nigeria’s financial system.” Yet, the geometric growth in the number of the Ponzi schemes subsists: springing up in all nooks and crannies of the country. And many operating in the virtual space!    

• The author, Okeke, a practicing Economist, Business Strategist, Sustainability expert and ex-Chief Economist of Zenith Bank Plc, lives in Lekki, Lagos. He can be reached via: obioraokeke2000@yahoo.com  (08033075697) SMS only