Nigerians have lost over ₦911 billion to Ponzi schemes in 23 years. Learn the facts behind notorious scams like MMM and MBA Forex, plus tips to avoid financial traps.

Scams and Ponzi schemes have become a significant concern in Nigeria, drawing in millions of individuals with the allure of high, quick returns on investment.
According to a report by Enact Africa, about 4,000 Nigerian university students nearly faced expulsion after diverting tuition fees totalling US$6.5 million into an online Ponzi scheme.
With smooth-talking promoters and a promise of returns as high as 30% or more, Ponzi schemes have successfully attracted a broad base of Nigerians, including low-income earners, middle-class investors, and even well-educated professionals.
In this article, we will explore the background, strategies, and impact of some of Nigeria’s most notorious scams and Ponzi schemes and guide how individuals can protect themselves from falling prey to these fraudulent investments.
Facts About Ponzi Schemes in Nigeria
- Nigerians have lost over ₦911 billion to Ponzi schemes and frauds over the past 23 years.
- The MMM scheme collapse in 2016 caused Nigerians to lose ₦18 billion.
- In the last five years, Ponzi schemes have cost Nigerians over ₦300 billion.
- Between 2020 and 2024, Nigerians lost ₦25.5 billion to electronic fraud.
- Over the past decade, Nigerians have lost more than US$1 billion (₦500 billion) to Ponzi schemes.
- MBA Forex, promising 15% returns, defrauded Nigerians of approximately US$500 million (₦213 billion) in 2021—nearly half of all losses to Ponzi schemes in ten years.
- From 2019 to 2021, many Ponzi schemes disguised as agricultural crowdfunding offered 15%-50% annual returns.
- Famzhi Interbiz Ltd's Mariam Suleiman was sentenced to five years for a US$5.2 million (₦2 billion) fraud.
- In 2019, the SEC froze about US$3.1 million (₦1.12 billion) in bank accounts linked to Ponzi operators.
- Banks were implicated in masking fraud funds, but no significant penalties or public investigations occurred.
- The SEC seized US$3.4 million (₦1.23 billion) in real estate linked to Ponzi schemes in 2019. A Ponzi scheme couple purchased US$60 million (₦22 billion) in properties via Imagine Global Holdings.
Ponzi and Pyramid Schemes
Ponzi Scheme is named after Charles Ponzi, who orchestrated one of the earliest known schemes of this type in the early 20th century. Ponzi schemes rely on the continuous inflow of new investments to maintain the illusion of profitability.
These schemes can continue to function for as long as there is a steady stream of new investors, but they inevitably collapse when recruitment slows, leaving the latest participants with significant financial losses.
A pyramid scheme, on the other hand, though similar to a Ponzi scheme in some respects, differs in its reliance on participant recruitment rather than investment. In a pyramid scheme, participants are promised returns based on the number of new people they can recruit.
Instead of investing money with the promise of future returns based on business activities, each participant’s potential earnings depend on how many other individuals they can bring in.
Notable Scams and Ponzi Schemes in Nigeria
Nigeria has experienced several major scams and Ponzi schemes that lured unsuspecting investors with promises of high returns. Here’s a summary of some infamous cases:
1. MMM Nigeria (2016)
Inspired by the Russian MMM model, MMM Nigeria claimed to be a “mutual aid community” and promised 30% monthly returns. Investors were told they could earn money by donating to others in the network.
The scheme depended on new investors to pay returns, and as its growth became unsustainable, payouts slowed. The 2016 recession further undermined confidence, and a freeze on accounts in December 2016 led to a full collapse, sparking public outcry.
2. Loom Money Nigeria (2019)
Loom was a pyramid scheme spread through social media, particularly WhatsApp and Facebook. It promised quick returns, with payouts coming from new recruits joining “investment circles.”
Loom relied entirely on continuous recruitment. When new members stopped joining, it could no longer sustain payouts, leading to failure. Media warnings and social media backlash contributed to the scheme’s rapid decline.
3. Pennywise Wealth Management (2020)
Pennywise posed as a wealth management firm with investments in agriculture, real estate, and forex, offering high returns. It attracted investors with promises of diversification and a professional image.
Despite its claims, Pennywise operated as a Ponzi scheme. It faced liquidity problems as more investors sought returns than new ones joining. Economic impacts from COVID-19 led to a wave of withdrawals, hastening its failure.
4. MBA Forex and Capital Investment (2020)
Promising high returns through forex trading, MBA Forex, led by Maxwell Odum, targeted Nigerians seeking profits in the forex market. It offered investment plans with monthly returns as high as 20%.
MBA Forex relied on new investments to pay returns rather than actual trading profits. The volatility of forex and the economic impacts of the pandemic put strain on the company. Regulatory scrutiny and investor complaints led to the arrest of its founder.
5. Racksterli (2021)
Racksterli was an online affiliate marketing and investment platform that promised high returns through a tiered subscription model. Participants could earn regular payouts based on their investment level or by recruiting new members, giving it the structure of a Ponzi scheme.
Racksterli gained popularity, especially on social media, where users posted about their earnings and promoted it as a quick, easy way to make money.
However, Racksterli eventually collapsed when new investor flow slowed, leaving many participants unable to withdraw their funds and facing significant financial losses. The Economic and Financial Crimes Commission (EFCC) investigated the scheme’s founder, making Racksterli yet another cautionary example of the risks of high-return investment schemes.
Factors Behind the Rise of Ponzi Schemes in Nigeria
Several interconnected factors drive the proliferation of Ponzi schemes in Nigeria, each contributing to an environment in which such schemes can thrive. Here’s an in-depth look at these driving factors:
Economic Hardships
High unemployment, inflation, and currency devaluation create a tough financial climate, leading many Nigerians to seek quick financial fixes. Ponzi schemes, with promises of high returns, appeal to those in need but often leave them worse off when these schemes collapse.
Financial Illiteracy
Limited knowledge about legitimate investments and financial principles makes many Nigerians vulnerable to scams. Without financial literacy, it's harder to distinguish genuine opportunities from fraud.
Social Media Influence
Platforms like Facebook, Instagram, and WhatsApp make it easy for Ponzi promoters to reach large audiences. Social media helps spread these schemes through testimonials and "success" stories, creating an illusion of legitimacy and encouraging participation.
Weak Regulatory Oversight
Regulatory bodies like the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) often struggle to keep up with Ponzi scheme tactics. The lack of strict enforcement allows many schemes to operate freely, leaving victims with few options for recourse.
How to Protect Yourself from Ponzi and Scam Schemes
Protecting oneself from Ponzi and scam schemes involves a combination of education, caution, and professional guidance. Here are key strategies to safeguard yourself from these types of scams:
Improve Financial Literacy
Familiarize yourself with how legitimate investments work, the realistic time frame for returns, and the risks involved. Free resources and financial literacy programs can help you become better prepared to identify scams.
Conduct Thorough Research (Due Diligence)
Before investing, verify the company’s registration and regulation status with official bodies like the Central Bank of Nigeria (CBN) or the Securities and Exchange Commission (SEC). Look for transparency in business models and financial reports, and avoid schemes that heavily depend on recruitment or lack clarity in their operations.
Be Wary of High-Return Promises
If an investment offers unusually high returns with low risk, proceed with caution—these are typical red flags of Ponzi schemes. Remember that legitimate investments carry some level of risk, and returns are usually proportional to that risk. Always question how the scheme generates sustainable returns, especially if it relies on recruiting new members.
Seek Advice from Financial Experts
Financial advisors can help you evaluate the legitimacy of investments based on your goals and risk tolerance, steering you away from risky schemes. Although professional advice may have costs, it can protect you from potential losses and help build a safe, diversified investment portfolio.
Conclusion
The prevalence of Ponzi schemes in Nigeria highlights both the economic hardships and the need for improved financial literacy across the country.
As more Nigerians seek quick returns to alleviate financial stress, scammers continue to exploit this desperation with enticing, yet unsustainable promises.
Ultimately, promoting financial education, strengthening regulatory oversight, and fostering awareness are essential steps in reducing the devastating impact of these schemes on Nigerians' finances and livelihoods.