The Nigerian National Assembly has passed a bill that aims at a more stringent punishment for operators of Ponzi schemes and illegal investment schemes in the country.
Though, the bill is awaiting President Muhammadu Buhari’s Assent.
According to Nigeria’s Securities and Exchange Commission, three million Nigerians lost N18bn when the popular Ponzi scheme, Mavrodi Mundial Movement aka MMM, crashed in 2016.
In 2022 alone, Nigerians have lost over N300bn in Ponzi schemes in five years, according to a report generated by the Norrenberger Financial Investments scheme.
The Senate President, Ahmad Lawan, stated that the bill is expected to protect investors, adequately regulate the market, reduce systemic risks, and provide for more stringent punishment for promoters of Ponzi schemes.
One of the significant developments that the new bill brings is the prohibition of Ponzi/Pyramid schemes.
These schemes, also known as pyramid sales schemes, are a money laundering system where investors are lured in with the promise of high returns on investment after a specified period.
The system runs in a somewhat cyclic fashion by paying old investors with deposits of new investors but usually becomes unsustainable when the backlog of old investors eligible for payments exceeds the investments coming into the system.
Promoters of Ponzi schemes will now face a jail term of not less than 10 years, and the bill also prescribes asset forfeiture and a fine of 10-20% of the amount of money collected from victims.
The Chairman of the House Committee on Capital Markets and Institutions, Babangida Ibrahim, stated that the ISB 2023 was capable of transforming the capital market, attracting foreign investors, and boosting investors’ confidence, among others.
However, the National Chairman of the Progressives Shareholders Association of Nigeria, Boniface Okezie, expressed a divergent opinion on the Ponzi scheme prohibition, saying that Ponzi schemes have been embraced in other places and accused the National Assembly of copying foreign laws that may have little or no impact on the Nigerian scene.
