Youth unemployment and Ponzi schemes in developing economies: Nigerian perspective

It is no gainsaying that a larger percentage of the Nigerian population is made of youths. This is why it is a common occurrence for the adults and the elderly to refer to them as the “leaders of tomorrow”. This is nothing further from the truth. Amidst all these assumptions, many of the youths face one challenge or the other. This challenge includes but not limited to peer pressure and the most common of these challenges been unemployment.

Many graduates from tertiary institutions – universities, polytechnics and colleges of education are not gainfully employed. This is why many of these youths engage in one form of activity or the other (legitimate and illegitimate) to survive. One of the new means of survival is what is referred to as Ponzi schemes.

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By definition, a Ponzi scheme according to Wikipedia, which is also known as Ponzi game, is a form of fraud that lures people and pays certain commissions to earlier investors with funds from recent investors. The scheme is based on the assumption that profits or remunerations are coming from product sales or other means. The scheme is named after a man named Charles Ponzi who was said to have used the scheme in the 1920s.

Apart from the fact that Ponzi schemes are not regulated by the government, and do not have the backing and approval of the law, the system of payment and operation is based on the cheating and duping. Hence, it “Robs Peter to Pay Paul”. Furthermore, Ponzi schemes require a first-hand initial investment. Most times, investors or those who patronize these schemes are encouraged to leave their money in the scheme so it will yield high returns.

Another noticeable feature of Ponzi schemes is that is often based on referral. That is, the more referrals a person has, the more his or her chances of getting more income, vice versa.

In Nigeria, Ponzi schemes are regular sources of income for people, especially youths and young school leavers. Many youths even see it as a way to make “quick money”, thereby using the proceeds of these schemes to acquire properties such as lands, houses and cars. Examples of popular Ponzi schemes are MMM (Mavrodi Mundial Moneybox), Twinkas, Clarita, Swiss Golden etc.

Solutions to the challenges of Ponzi schemes among the youths

The following are the recommended solutions to put an end to the endemic and pandemic rise of Ponzi schemes especially among Nigerian youths:

1. Orientation

Since information is power, the government through its information and media agencies should carry out orientation on the negative effects of patronizing Ponzi schemes.

2. Provision of employment opportunities

Adequate job opportunities should be created for the teeming youthful population. Furthermore, youths should be encouraged to be job creators and not job seekers.

3. Prosecution

This will help to serve a deterrent to those who have the mind of engaging in the act.

By Momoh Emmanuel Omeiza

Email address: [email protected]