RipplesMetrics: Nigerians lose N59.33 billion in five years to fraud

Despite numerous financial literacy campaigns and high-profile crashes of Ponzi schemes over the past decade, Nigerians continue to fall victim to fraud, and the scale of losses is staggering.

For instance, CBEX has added its name to the growing list of high-profile scams in Nigeria, with over ₦1.3 trillion reportedly siphoned from unsuspecting investors. Launched in July 2024, the scheme lured participants with the promise of a 100% return on investment within 30 days.

According to data from the Nigeria Inter-Bank Settlement System (NIBSS), Nigerians lost ₦17.67 billion to fraud in 2023 alone, a 496% increase from the ₦2.96 billion lost in 2019.

This troubling trend underscores a persistent vulnerability in the Nigerian financial landscape, one that fraudsters continue to exploit, often under the guise of too-good-to-be-true investment opportunities, much like the Ponzi schemes that have plagued the country for years.

Ponzi schemes — fraudulent investment scams promising high returns with little risk — have long found fertile ground in Nigeria. From MMM (Mavrodi Mondial Moneybox), which collapsed in 2016 after scamming millions of Nigerians, to Ultimate Cycler, Loom Nigeria, and RackSterli, each new wave promises wealth and leaves a trail of financial ruin.

MMM, for instance, promised 30% monthly returns and at its peak had over 2 million Nigerian users before its eventual collapse, costing victims billions of naira. Despite its demise, Nigerians continued to patronise similar schemes in what appears to be a mix of desperation and hope, driven by poverty, unemployment, and a general distrust in traditional financial institutions.

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According to NIBSS data, the annual fraud count has increased by 112% from 44,947 in 2019 to 95,620 in 2023.

The Modern Face of Fraud

Data from 2022–2023 reveals that the most effective fraud tactic in Nigeria is social engineering, which accounted for a staggering ₦8.03 billion in losses. This method often mimics Ponzi-style approaches, convincing victims to divulge personal information or send money under false pretences of assistance, investment opportunities, or online friendships.

“Fake Assistance” — often seen in online communities where fraudsters pose as helpful agents offering financial help or urgent solutions — was responsible for ₦1.01 billion in losses. These schemes exploit the same psychological vulnerabilities as Ponzi schemes: trust, urgency, and the allure of quick financial relief.

Other prevalent fraud tactics include website/server hacking (₦2.44 billion), robbery, PIN compromise, and internal collusion — all pointing to a broader ecosystem of financial insecurity.

Several factors contribute to the persistence of Ponzi and fraud-related losses in Nigeria: economic hardship, financial illiteracy, weak regulatory enforcement, and low trust in formal banking.

The scale of financial fraud has moved beyond personal losses. With ₦17.67 billion lost in just one year, the cumulative impact on the economy is enormous. Despite the collapse of MMM and the repeated warnings, the figures show that Nigerians remain deeply susceptible to fraud, particularly those that mirror the structure and promises of Ponzi schemes. With fraudsters evolving and losses mounting, Nigeria must confront not just the scammers but the conditions that allow them to thrive.

By: James Odunayo

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