A proper understanding of the financial market will reduce the growing Ponzi industry in Nigeria, according to experts.
Ponzi is a fraudulent scheme in which existing investors are paid with funds collected from new investors.
Nigerians have fallen for several Ponzi schemes, including Mavrodial Mondial Movement (MMM), which affected over three million Nigerians, Twinkas, Ultimate Cycler, Zar Fund, Givers Forum, iCharity, Get Help Worldwide, CBEX and more. BusinessDay reported that Nigerians lost $1.3 billion to China-based CBEX.
Financial losses from Ponzi schemes have shattered several families, put a number of people in debt while leading to terminal illnesses such as hypertension and heart diseases, including death.
Bola Vaughan, a financial expert, said that Ponzi organisers often promise to invest money with high returns, assuring their victim of little risk.
“With little or no legitimate earnings, Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit new investors, these schemes tend to collapse,” she said.
Financial experts advocate for the introduction of financial education at high or secondary schools to broaden citizens’ knowledge. They noted that Nigerians continue to lose their hard-earned money to Ponzi schemes due to greed and lack of proper knowledge of the financial markets.
They argue that including financial markets education in the high school curriculum is crucial for equipping students with the knowledge to enable them to make informed financial decisions and manage their money effectively.
Vaughan said introducing financial education in schools can help Nigerians to make smart financial decisions and avoid scams.
“Financial education will help students learn to evaluate investment opportunities and identify potential risks. Hence, they become aware of the risks associated with investments and can spot red flags.
“Students learn how to manage finances, budget, invest wisely, and reduce the risk of falling prey to scams because when people are financially literate, they make smart decisions, contributing to a more stable financial system,” she said.
Isaac Agenyi, chief operating officer at Moto Business Services Nigeria Limited, emphasised the need to teach financial literacy to children, especially topics such as earning and savings, needs versus wants, budgeting, investing, risk and reward, and fraud and scams, among others.
“The curriculum should teach children the importance of earning money through hard work and saving a portion of their earnings; help children differentiate between needs, essential items, and wants, non-essential items.
Read also: How criminals use social engineering to promote modern Ponzi schemes and how you can spot the signs
“It should also introduce children to basic budgeting concepts, such as allocating money for different expenses. It should teach them about different investment options, such as savings accounts, stocks, and bonds,” he said.
Nubi Achebo, director of academic planning at the Nigerian University of Technology and Management (NUTM), said introducing financial education in the curriculum at the secondary school level would be helpful.
“The contents should include teachings on piggy banking, cooperative business, investment, and history of fraud in business, among others,” he said.
Achebo further said that financial education would empower individuals to make informed decisions about investments, savings, and financial planning.
“Educating students about Ponzi schemes and other financial scams can help them recognise red flags and avoid falling victim,” he noted.
Friday Erhabor, director of media and strategies at Marklenez Limited, believes that introducing financial education as a basic and compulsory course will help Nigeria avoid taking uncalculated risks.
Erhabor emphasised that it should not only be introduced in schools because of the Ponzi scheme, but also to help solve the ‘japa’ menace.
“How do you explain the fact that a young boy of 20 to 25 will force the parents to sell their land or house for N10 million just to travel abroad, not to study but for menial jobs?” he asked.
Erhabor suggested that the curriculum could come in the form of ‘gamefication,’ such as a monopoly game, where children would learn the metrics of investing or otherwise through games.
Read also: Ponzi Schemes: 6 Biggest frauds that scammed Nigerians
Financial knowledge gap
Many Nigerians who grew up in an era where almost everything was provided by their parents and did not face challenges.
Adenike Ogunyale, head of retail and mass affluent sales at Cordros Asset Management, stressed that financial literacy for youngsters is essential because it enables them to imbibe financial values early and avoid being irresponsible.
“Since financial literacy is not taught in basic schools, many children grow up not understanding the dynamics of investments and everything that goes into financial planning,” she said.
Impact on Ponzi Schemes
Financial literacy encompasses understanding and effectively managing financial matters such as budgeting, investing, and debt management.
Achebo, earlier quoted, insisted that financial education in schools would promote critical thinking, enabling individuals to evaluate investment opportunities more effectively.
Ogunyale explained that financial education in schools is essential as it would enable students to imbibe a financial management culture.
Implementation
Financial experts believe one of the most important lessons that youngsters can learn is how to manage their money.
Vaughan emphasised that to make this initiative impactful, there is a need to use real-life examples, with the introduction of adjunct teachers.
“The curriculum should illustrate financial concepts with practical examples and case studies. Experts, such as stockbrokers and wealth managers, can provide valuable insights and experiences if invited,” she stressed.
Achebo pointed out the need to tailor the teaching content to the students’ age and level of understanding.
