What is Ponzi Scheme? How to Detect a Ponzi Scheme presented as an Investment or Business in Nigeria

Every year in Nigeria, there are lots of fraudulent and unworkable businesses and investment plans released to Nigerians. These businesses and investment plans are mostly called Ponzi schemes. It leads to a lot of Nigerians losing their money to them. In this post, we’ll be looking at the matter of what is ponzi scheme and how to detect a ponzi scheme presented as an investment or business in Nigeria.

What is Ponzi Scheme?

Ponzi scheme in simple definition and understanding are businesses or investment with unworkable and fraudulent process of business. By this, we mean that people are approached to invest in the business and promised ridiculously high returns. For instance, you are approached to bring 100K, register in a website, and two people will pay you 150K the next day. Then, it goes on and on.

Most at times, the place you are putting the money, there is no enterprise there or real business. They are all waiting for people to put in their money so they can pay others. There are no goods on sale, and no services to be rendered.

100% of all the time, or all the time, this so-called businesses or investments, fail. There are always others who amass great wealth, and there are others who don’t. A majority of the people lose their money when the business collapses.

How to Detect a Ponzi Scheme presented as an Investment or Business in Nigeria

1. There is no real business or enterprise behind the scheme. It is just based on people registering, referring other people to register, and then money comes in to pay other people.

2. Even if there is business or enterprise, it doesn’t meet up with the promised profit and earnings. For instance, the business is an agricultural firm that owns 10 hectares of maize and cassava farm, and you are asked to invest to get 10% profit of your money monthly, please, run.

3. Therefore, the interest promised is too much. The average profit you should make from any passive investment is 2% monthly. Most often, the investments and businesses that promise more than these are fraud.

4. The success story of the company told is too good to be true. Nigerians are used to be lied for by some so-called entrepreneurs and business men. Example is when a 25-year-old man tells you he started farming at 20 with very little seed capital and two plots of land of a pepper farm, and in 5 years, he owns 10 hectares of land and a pepper processing factory.

In most of these too good to be true success story, they are non-facts spurn to deceive the investors and the public.

5. Due to how high the profit promised by these companies are, the news of the investment in them goes far and wide. The company soon becomes popular on social media platforms or offline. This is a red flag.

6. No serious company or business opens its investment plans to everyone without having a limit. What we mean by this is that even if the business needs investors, they have a limit they take. It can be like 5 persons to 50 persons. They will never keep asking people to invest without ending.

7. Any business that’s asking for investors should have registered in all the necessary government agencies. It doesn’t have to be only CAC; you have to check if the business registered in other related agencies as well.


This post has examined what is ponzi scheme and how to detect a ponzi scheme presented as an investment or business in Nigeria. You are to do well to avoid them, and run as fast as you can. When the urge is strong to join one, especially when it is popular, and all your friends have benefitted from it, you still have to resist the urge to join. Ponzi schemes are life wreckers.