By Sultan Oluwaseunayofunmi
Dear Duke of Shomolu,
Your commentary is as sobering as it is thought-provoking. You have laid bare a reality that has quietly become a national emergency. The reported N1.3 trillion loss to CBEX is not just a number—it represents crushed dreams, wiped-out savings, and further erosion of trust in our financial system.
You’re absolutely right in stating that Ponzi schemes operate on an irresistible appeal: high returns, little effort, and instant gratification. It’s a cocktail that preys on desperation, financial illiteracy, and mistrust in traditional financial institutions. The psychology behind this is clear—people aren’t just being greedy; they are trying to escape economic suffocation.
Let’s break this down:
- The Economic Context
Your reference to “a minimum wage that can only buy Boli and Epa” encapsulates the desperation with surgical precision. Hyperinflation, rising unemployment, and the absence of strong social safety nets have made the average Nigerian increasingly vulnerable. With legitimate investments offering single-digit annual returns while food prices rise monthly, a 40% return in 30 days looks like a miracle—and desperate people bet on miracles.
- Market Psychology and Trust Deficit
As you rightly observed, Ponzi operators understand the market psychology better than most regulators or fund managers. They exploit emotional pain points, offer ease of access, and employ aggressive affiliate marketing that rewards users for recruiting others—turning victims into evangelists.
There is also a severe trust gap between the public and formal institutions. Many Nigerians do not trust banks, fund managers, or even regulators. Years of unresolved banking issues, insider abuses, and perceived elitism have made them feel that the “system” is designed to exclude them. Ponzi schemes feel more “personal,” “responsive,” and even “community-driven” compared to cold, bureaucratic financial institutions.
- Regulatory Weakness and Structural Gaps
You are spot on in noting that the SEC, despite its good intentions and dedicated leadership, is underpowered. This is not just about funding or staffing—it is also about tools, reach, inter-agency synergy, and adaptability in a fast-evolving digital financial space. The rise of crypto-based schemes, anonymous digital wallets, and decentralized finance (DeFi) models means criminals can operate without borders while the SEC remains constrained by outdated regulatory models and fragmented enforcement frameworks.
The passing of the ISA (Investments and Securities Act) is a major win, but laws are only as effective as the institutions that implement them. As you rightly said, it’s not enough to “verbally caution a toddler not to go near fire”; we must extinguish the flames and build barriers.
- What Needs to Be Done – Beyond the Obvious
Yes, public education must continue—but not in the old way. It must be compelling, grassroots, and backed by influencers, religious institutions, and even Nollywood. But more critically, we must:
Create viable alternatives: Unless Nigerians have access to legitimate, high-performing, secure financial products, Ponzi schemes will always seem more attractive. Licensed fund managers must innovate—digital onboarding, competitive rates, and inclusive products are key.
Engage Fintech gatekeepers: Payment platforms, banks, crypto exchanges, and mobile money operators must be partners in prevention. Strong KYC/AML protocols and the use of AI to flag suspicious transactions are essential.
Implement a whistleblowing and restitution framework: Victims should be encouraged to speak up, with some form of protection or compensation. Meanwhile, promoters should face swift, high-profile prosecution to act as deterrents.
Pursue cross-border enforcement: As you rightly stated, this is a borderless crime. International cooperation is crucial. Interpol, cybersecurity experts, and digital intelligence arms must become allies in the fight.
Strengthen internal capacity at SEC: No one brings a knife to a gunfight. SEC must retool—new digital arms, forensic capabilities, data-driven intelligence teams, and tech-savvy staff are non-negotiable.
- Conclusion
In all, the fight against Ponzi schemes is a battle for Nigeria’s financial soul. It requires not just laws, but leadership; not just policies, but passion. As you’ve so eloquently stated, this is indeed the battle of a lifetime for the SEC DG—and by extension, for the country.
Your call for a multi-institutional, multi-level approach that includes both preventive and punitive elements is exactly the kind of roadmap we need. If anything, your message should be tabled at the highest policy levels, not just shared in forums.
Let us not just pray for the SEC—we must all lend our voices, platforms, and ideas to this critical mission.
Thank you for raising the alarm once again.
