In 1980 or 1981, I learnt a very important lesson that shaped my life. My father had given me “pocket money” and money for provisions for the new term. My brother, Ufuoma, escorted me to Igbudu Market, Warri, Delta State, to buy provisions. When we got to the market, we saw women doing “try your luck” (amateur gambling).
Then greed got the better of me. I thought that I could double my provision money and buy more provisions. I decided to stake N1, then N2… (N1 could buy you five tins of sardine at 20k each then). Then Ufuoma noticed that the women were manipulating the table to ensure that I lost each round. He became insistent that we should leave. I would plead with him to allow me one more time.
We were conversing in Urhobo and the women understood. They would manipulate the table to ensure I won the next time. I would tell Ufuoma to allow me continue because I was winning. I wanted to win back the money I lost. Then I would go on a losing streak, then win intermittently. It continued until I had N2 left. We left and walked home. I almost died of hunger that term.
But the experience was a blessing in disguise. Even as a young teenager, I saw the danger of greed. Forty-five years later, I have never gambled again. Then I learnt that greed is not enough to stop you from being scammed. Desperation can also make you vulnerable to scammers. So, you need to cure yourself of desperation. Later in life I started reading books on personal finance and financial literacy.
I learnt that you should not put your money in any business you do not understand. You must acquire the knowledge of how the business operates and generates money or you get your fingers burnt. Acquiring the knowledge is no guarantee that it must be successful all the time, but it increases your probability of succeeding. A life devoid of greed, desperation and having knowledge of what you are investing in is a sure way of avoiding being scammed.
Why I am going into this long introduction. You must have read about the latest collapse of a Ponzi scheme in Nigeria called CBEX, a digital trading platform with a Nigerian affiliate called Smart Treasure, which started from Ibadan. Last weekend, people who invested in the scheme could no longer access the platform or do transactions. In all depositors have allegedly lost 1.3trillion (about $847m)! Now, let us examine the three ways I have applied to stay safe since 1981. One, zero greed. I wiped greed out of my life after that my experience.
I was greedy; that’s why those women at Igbudu Market scammed me. If you are not greedy, you make it very difficult for anybody to dupe you. The highest genuine returns on investments in Nigeria that I know are between 14 per cent to 20 per cent. These are the usual ROI (returns on investment). Of course, there are exceptional cases where people make more money. Someone bought a property. Less than a year later, someone who needed the property urgently offered almost double the amount he paid for the property. Of course, he sold it.
Investors buy stocks and a short while later, something occurs and the stock price skyrockets. But these are not every day cases. In the case of most Ponzi schemes, they promise investors 100 per cent returns within a month. How is that possible? One hundred per cent ROI within a month? Which business is the company doing with your money? It doesn’t make sense. Don’t you ask questions, investigate or use common sense? Only greedy, desperate or dumb people put their money in such investments.
Two, desperation. Many people are desperate to make quick money without regards for money making principles that have endured over time. Some people blame their desperation on the current hardship. I beg to disagree sir/ma. Some people have always been desperate to make quick money. This is not the first Ponzi schemes in Nigeria. There have been probably over a 100 Ponzi schemes in Nigeria in the last decade. Some, like MMM, were popular while some were less popular. Either way, Nigerians lost billions of Nigeria due to greed, desperation and ignorance. Tomorrow, another Ponzi scheme will crop up and people will invest and lose their hard earned money again.
I learnt that CBEX originated in China, but you cannot rule out Nigerian collaborators. Who rented the office in Ibadan? And it looks like the CBEX people are not done with their “investors” They have told investors to pay between $100 and $200 to verify their names on the platform so that payment can commence. These guys are blood-sucking demons. I learnt another valuable lesson from a friend: Cut your losses and know when to do so.
Three, education. Before investing your money in any business, you should learn about what you are investing your money in, and if you are investing through third parties, understand their business. I remember when I wanted to start investing in stocks, I spent money attending seminars where I was taught technical and fundamental analyses of stocks. When the stock market collapsed, like many other Nigerians, I lost money but it was not necessarily due to lack of knowledge.
I remember some stocks I avoided because of my knowledge of stock analysis. One was a company that was into confectionary then. Their bread was good and my family favourite. Then I noticed a gradual depreciation in their service delivery. When their shares were listed in the stock exchange, it rose to N3.50. I avoided it like a plague. The share dropped to 50k before the company was eventually delisted from the stock exchange. There are other stocks like that I avoided because of my knowledge of stock analysis then.
Now, who are the owners and directors of CBEX? They are not yet known. All we have heard is that CBEX is from China. Yet people entrusted CBEX with thousands of dollars. Some people sold houses and other assets to invest. No now! It doesn’t make sense. In the past, even some microfinance banks and finance houses of owners and directors we knew packed up and people lost billions of naira, not to talk of Ponzi schemes with faceless promoters. Wise up.
In the meantime, the Economic and Financial Crimes Commission (EFCC), has assured the investors that the commission will help them recover their money. It said it is already on the matter. It has spread its dragnet. That would be great, but my worry is that is the money still there? The way Ponzi schemes like this work is that they scarcely do any trading. They rely on new “investors” to subscribe.
They use the money to pay those whose payments are due. They continue with the false narrative of trading until they drag enough “investors” and cash into their dragnet. They cash out and the platform collapses, leaving investors weeping and gnashing their teeth, while some commit suicide or die of heart attack and stroke. I hope EFCC will deliver as it promised.
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