EFFECT OF PONZI SCHEMES ON FINANCIAL LOSSES IN NIGERIA: LESSONS FROM THE PAST AND RECENT SCAMS

Abstract

This study examines the effect of Ponzi Schemes on Financial Losses in Nigeria by analyzing ten major schemes that operated between 2015 and 2025. The study population includes all publicly known fraudulent investment operations within this period, from which a purposive sample of ten schemes such as CBEX, MMM, MBA Forex, Crowd1, and FINAFRICA was selected based on financial scale, data availability, and public significance. Secondary data were gathered on variables including number of investors, promised return rates, scheme duration (in months), inflation, and unemployment. These data were sourced from the Central Bank of Nigeria (CBN), the Nigeria Deposit Insurance Corporation (NDIC), investigative media reports (BusinessDay, Proshare), and prior academic research. Using descriptive statistics, Pearson correlation, and multiple regression analysis, the study found that schemes offering the highest promised returns such as CBEX and Crowd1 produced the greatest financial losses. MBA Forex and FINAFRICA also recorded significant losses, regardless of their duration or investor count. Inflation was moderately associated with financial losses, indicating economic pressure as a contributing factor. Unemployment, however, showed a weaker influence, possibly due to lower risk-taking among jobless individuals. The findings suggest that investor vulnerability is driven by a combination of unrealistic return expectations, poor regulation, and economic instability. The study recommends stronger regulatory enforcement, public financial education, and economic reforms that address inflation and joblessness as strategies to reduce the appeal and impact of Ponzi schemes.