By Shamsiyya Hamza Ibrahim
A landmark bill brought by Nigeria's parliament to hand 10-year jail terms to promoters of Ponzi schemes is being seen as a much-needed safeguard against fraud for millions of investors caught between the promise of big returns and the falsehood of fly-by-night operators.
The move comes after prolonged heartburn over millions of Nigerians already falling prey to dud schemes that ate up their life's savings.
As of 2022, Nigerians had lost over 300 billion naira to Ponzi schemes in the past five years alone, according to a report by Norrenberger Financial Investments.
Senate president Ahmad Lawan says the bill is meant to protect investors by adequately regulating the market and reducing systemic risks, besides stipulating more stringent punishment for promoters of Ponzi schemes.
Hassan Sardauna Yamayo, a social affairs analyst and expert in monetary policies, believes the bill hasn't come a day too soon.
"It is a very important decision in the history of Nigeria. Fraudulent activities are becoming so common across sectors, be it Yahoo-Yahoo, hackers, scammers or Ponzi scheme promoters. All of these needed to be dealt with strictly," he said.
Yunusa Abubakar, a member of the lower parliament, says the bill was expected to aid the functioning of the capital market and facilitate the ongoing economic diversification in the country.
"The objective is to make this kind of shady business a difficult thing to do going forward," he tells TRT Afrika.
Endemic problem
While the passage of the bill in parliament came about smoothly, it still needs presidential assent to become a law.
"I am so excited with this measure taken by the National Assembly. I hope it will be signed into law as soon as possible," says Fauziyya Hussaini, a victim of Ponzi fraud.
Lawmaker Abubakar sees the bill restoring the faith of 150 million Nigerians in the establishment's commitment and ability to protect their interests.
According to Nigeria's Securities and Exchange Commission, three million Nigerians cumulatively lost 18 billion naira when the Ponzi scheme MMM, short for Mavrodi Mundial Movement, crashed in 2016.
The scale of the financial disaster didn't deter Ponzi operators from thinking up new ways to swindle people or investors from putting their money in these schemes.
Epidemic of fraud Ponzi schemes generally employ the pyramid sales strategy, creating a house of cards that lures people with the promise of high returns on investment after a specific period.
Cyber security expert Yusufdeen A Yusuf terms the proliferation of such pyramid schemes in Nigeria "alarming and worrisome", more so because the obsession with easy money refuses to abate despite known pitfalls.
Zainab Shehu is one among many Nigerians to have put her hard-earned money in a scheme that flattered to deceive. She lost about 700,000 naira after being introduced to an online business by a friend. The experience left Zainab so frustrated.
‘'The first time, I paid 100,000 naira and after two weeks, the money doubled. I was really excited when I got the money and decided to invest another 500,000 naira, and that was when I got myself trapped. Up to now, no capital, no profit.''
The proposed new law to prevent such instances from recurring is something she hopes would make investing fraught with less risk than when she burnt her pocket. "I welcome this decision by the National Assembly as it will serve as a severe warning to fraudsters," she says.
Fellow investor Fauziyya, who lost more than 500,000 naira in two Ponzi schemes, recalled that the worst part of it was the mental agony she went through.
“I would never ever advice anyone to put their money in such investments. Chasing easy money will never yield a positive result,” she warns.
The way forward The next step is for the proposed legislation is to go through the process of what Abubakar describes as "bill cleaning" before it is sent to the President, who has 30 days to sign it to become a law in the country.
Cleansing the system
In the event of the President disagreeing or declining to sign the bill, he has to provide parliament with strong reasons of not doing so.
"If we agree to his arguments, then we can amend the bill, and if we don’t or he refuses to send a response after 30 days, the National Assembly has every right to override the virtues of the President," Abubakar explains.
The MP's statement brings hope to victims of like Fauziyya and Zainab, who have been desperately waiting to see the fraudsters put behind bars.
"The activities of such people have serious negative impact on people and the economy. I am optimistic that this bill will definitely bring a change, even if slight, especially at a time when Ponzi activities are spiraling more than ever before," says social affairs analyst Yamayo.
Commending parliament for taking the first big step, he urges MPs to make sure the rule of sentencing fraudsters applies to everyone, irrespective of social or political status.
Cyber security expert Yusuf is also convinced the bill will keep Ponzi operators in Nigeria on a leash. He suggests that the authorities should now focus on increasing awareness among Nigerians about the perils of chasing quick returns.
"If Nigerians can be kept away from the enticement and deception of the swindlers, that in itself will go a long way in curbing the Ponzi menace," he tells TRT Afrika.
