Nigerians have become increasingly vulnerable to digital investment scams, especially Ponzi schemes, due to a confluence of socio-economic factors, technological growth, and regulatory gaps. The devastating effects of these scams, such as the recent collapse of CBEX which alone reportedly swindled Nigerians of over ₦1.4 trillion, underscore why understanding this vulnerability is crucial.
One primary driving force is widespread financial illiteracy. Many Nigerians lack a deep understanding of investment principles and digital assets, making them susceptible to schemes that promise unrealistic and guaranteed returns. Fraudsters capitalise on this knowledge gap by designing sophisticated scams masquerading as legitimate digital asset platforms, often using trendy buzzwords like “AI-driven crypto trading” or “blockchain technology” to impress and confuse potential investors. The complexity and obscurity of these schemes’ business models prevent victims from grasping the risks involved, while aggressive marketing through social media platforms further fuels the allure.
Economic hardship compounded by high poverty and unemployment rates is another key factor. Data from the World Poverty Clock showed that extreme poverty in Nigeria increased from roughly 87 million people in 2018 to nearly 94 million in 2019, with the unemployment rate reaching 33.3% in late 2020.
This economic distress creates fertile ground for “get-rich-quick” mentalities, as people desperate for financial relief are more willing to engage in risky and poorly understood investments. The Federal Economic and Financial Crimes Commission (EFCC) notes that greed and the fear of missing out (FOMO), amplified by social media portrayals of wealth and success, push many Nigerians into these fraudulent schemes.
Technological advancements and the rapid adoption of digital financial services, including cryptocurrencies, have further increased exposure. Nigeria leads Africa in crypto adoption, with over $59 billion in crypto transactions between July 2023 and June 2024.
The decentralised, borderless, and often unregulated nature of digital assets provides anonymity and ease of cross-border fund transfers that scammers exploit to launder illicit funds and execute exit scams. Regulators have found that many fraudsters use fake tokens, referral-based multi-level marketing structures, and shell companies to hide the true nature of their operations.
Regulatory oversight, though improving, still struggles to keep pace with these rapidly evolving scams. Many Ponzi schemes operate without registration or licensing from critical authorities such as the Securities and Exchange Commission (SEC) or the Central Bank of Nigeria (CBN). This lack of formal oversight allows fraudsters to operate in a legal grey area, making it harder for victims to seek recourse and for authorities to shut down illicit schemes promptly. Despite recent legislation such as the Investment and Securities Act 2025 which empowers regulators to oversee digital assets and punishes fraudulent promotions harshly, enforcement remains a challenge.
Social and psychological pressures also contribute. Schemes often leverage social proof, testimonials, and endorsements from influencers or alleged respected entities to build trust. Peer pressure, particularly within community or online networks, encourages recruitment of friends and family, perpetuating the cycle of fraud. Scammers apply urgency tactics (“limited-time offers,” “exclusive spots”) to discourage critical scrutiny and due diligence. This combination of emotional manipulation and social dynamics manipulates vulnerable individuals into investing.
The consequences are severe. Beyond the enormous financial losses estimated at over ₦1.7 trillion lost to Ponzi schemes in the last nine years, victims suffer emotional trauma, loss of trust in financial systems, and setbacks to Nigeria’s overall economic development. The EFCC and other agencies are actively raising awareness, enforcing KYC/AML rules, and increasing collaboration with international partners to combat these scams, but public vigilance remains crucial.
Nigerians’ proneness to digital investment scams is driven by financial illiteracy, severe economic hardships, rapid technological adoption without commensurate regulation, and sophisticated social engineering by fraudsters. Tackling this menace requires continued regulatory strengthening, widespread public education on recognising red flags, financial inclusion efforts that empower citizens, and collective societal commitment to reject the lure of unrealistic riches. Only then can Nigeria mitigate the devastating impact of these pervasive scams and protect its citizens’ financial well-being.
Wale Williams is the Chief Information and Technology Officer at Union Bank
