N1.3 trillion is the reported loss by Nigerians in the latest CBEX matter.
Ponzi Schemes now litter the space with the SEC almost at a loss as to how to curb this or protect Nigerians from it. A Ponzi Scheme is basically robbing Peter to pay Paul. You take from one and give the other and cream off for yourself some, and everybody is happy until, like a domino everything falls flat.
Despite the cries, Nigerians flock to these schemes with so much vigour that one begins to wonder why. It is held in some circles that funds held and traded in these Ponzi schemes far dwarf what is being held by legitimate licensed Fund Managers by almost 1,000%.
How do you compete with single-digit returns, cumbersome screening and heavy regulations against a competitor with four-figure returns, little or no entry barrier, ease of moving funds and instant rewards, especially with benefits accruing from affiliate marketing, which further deepens the earning power of the target?
The Fund Managers Association of Nigeria really have no prayer in this matter as they cannot even compete with the speed, ease, and buxom returns of these crazed marauders. It is no wonder that they are losing business to the Ponzi operators, who seem to understand the market psychology better.
The weak regulatory environment, loose enforcement and lack of controls on the upside further boost their activities. But much more importantly, on the side of the market, you get tough economic conditions and poor investment education being the bane of the Nigerian investor.
We all know how tough the economy is, leading to job losses, hyperinflation and poor micro and macroeconomic indices stifling socio-economic development, amongst others. With a minimum wage that can only buy Boli and Epa, according to our Economic guru Tope Fasua, an opportunity for a quadruple return on investment in 30 days or less is something that even the most pious of individuals would find very difficult to resist.
By the time you now add the poor investment education indices, what you have is a fallen petrol tanker with fuel spilling and people scooping scenario, which most of the time ends in an explosion consuming everyone.
The SEC’s approach of robust social education through massive public awareness can not work. It is like verbally cautioning a toddler not to go near a fire without making an attempt to remove the fire.
In my discussions with the hard-working SEC DG, he talked very passionately about his resolve to tackle this menace. The passing of the ISA would embolden him and give him a stronger platform to fight this fight. He really has to win this fight cos it’s like a fibroid in the womb. If not excavated, it would grow unwieldy and disturb the process of taking in.
The SEC DG has a real battle on his hands, and if you ask me, it’s the battle of his life going by the volumes being lost, which is a good fraction of our national GDP. Now that he has his ISA, he should not only intensify his campaign awareness and education; he must engender a multi-institutional framework that would bring together various local and international monetary and legal enforcement authorities to come together to instil process and stop gaps in the areas of transfers both inbound and outbound.
Local institutions like CBN, EFCC, Deposit Monetary Banks and even the National Assembly and intelligence community must be pulled in. On the outflow side, Car dealers, Real estate and other such endgame beneficiaries of these bogus returns can also be pulled in and made to report such purchases that can not be justified through legal means – they already do this to some point.
Internationally, Interpol, cyber security experts, the international Intelligence community and all of that can also be pulled in. This crime is borderless, aided by seamless fintech capacity, hence the need to forge intensive International corporations to effectively fight this scourge. It will take much more than the boundless emotional energy for the DG of SEC to push back very aggressively at this matter but a strategic and focus-based push at identifying these promoters, instituting institutional stop gaps at various payment gates, among others, while intensifying the already running public awareness campaigns.
Internally, SEC must also build structures thatbwould havr better trained human capital thatbwould now be deployed to this fight. It canot use its present internal stuructural capacity to fight a digitally enhanced hydra headed menace, it too must forge a digitally enhanced hydra headed structure to combat it.
SEC’s job is clearly cut out for them, and they must, in turn, show more than passing resolve that they first understand the issue and secondly have clarity as to how to tackle it. I really do not envy them at this point but my prayers are with them
Thanks
Duke of Shomolu
