Naija no dey carry last…until someone promises 60% ROI

We need to do something about our Ponzi scheme epidemic

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We need clearer thinking on dealing with Ponzi schemes

On April 16, 2020, Marcelliot opened a Nairaland thread to ask a question that would be classified as his due diligence before making an investment: “has anyone invested in Chinmark group?” The good people of Nairaland provided answers. “They’re reliable,” wrote one person. “Their returns are around 2-5% per month, but if you’re investing over N2 million, they may give you a higher percentage. Save for one person, most people in the thread assured Marcelliot that he was in safe hands and should go-ahead to invest in Chinmark for returns of up to 60% yearly. 

Chinmark describes itself as “a global conglomerate made up of subsidiaries that provide an opportunity to touch lives via the services she provides.” Per its website, the company has interests in hospitality, construction, agriculture, logistics, the food industry and so much more. Yet, you may not have heard about this company that has its hand in every pie until last week when over 4,000 investors demanded the billions of Naira that they had invested in the company. 

This week’s collapse of Chinmark is the latest from a long run of similar but equally popular schemes in the last two years. The Maps and MBA Forex duped people of billions of Naira, and it’s neither here nor there as to how the victims will get their money back. Apart from these easy to recognise schemes, investments in agriculture that likewise promised big returns have also struggled to return money to investors. Agropartnerships, which was sealed by the Securities and Exchange Commission (SEC) last week, is also reportedly owing thousands of investors. 

While the SEC is taking action against some of these companies, it sometimes feels like they’re on the scene a little too late. By the time the SEC moves against these companies, often sealing their offices for operating without licenses, thousands of investors would have usually been duped of their money, and very few are ever able to recoup the said sums. It’s possible to argue that the current laws don’t allow the SEC the leeway to do more. 

It bears asking about the progress of the House of Reps, which in January proposed ‘A bill to repeal the Investment and Securities Act 2007 and to enact the Investments and Securities Act, 2021’ – under that amendment, the SEC will be empowered to address the challenges of Ponzi schemes. Section 195 (1) of the bill empowers SEC thus: “The Commission shall have the power to enter and seal up all prohibited schemes and shall obtain an Order of court to freeze and forfeit all assets of such schemes to the Federal Government of Nigeria.”

While the progress of the bill remains unclear, one thing is clear: we need decisive and clearer action against ponzi scheme operators, especially when they’re fairly easy to spot, as in the case of Chinmark, before they steal billions from Nigerians.

CBN and the Nigerian customs can’t make up their minds about e-valuation 

Remember the e-valuation and e-invoicing policy that CBN resurrected last month? The same confusing policy that led to strikes by port operators in Lagos which eventually forced the CBN to hit pause on it? That policy may eventually be phased out like it was in 2021 when it was first introduced. 

The Nigerian customs, which is mostly affected by the policy, has pointed out that e-valuation and invoicing breaks several WTO rules. 

E-valuation explained: before now, car importers, for example, paid import duties on vehicles by manually applying for a valuation. The new process uses price guidance for vehicles from which import duties are automatically calculated, which in theory means that importers cannot avoid paying the correct rates on vehicles by bribing port officials. 

While the e-valuation policy has its merits, its primary weakness lies in its price verification mechanism that seeks to benchmark prices for importers and exporters. Exporting is not an exciting prospect if the CBN can set the maximum mark-up you can charge on an item.

For now, it’s still a pause on e-verification but I’m willing to wager that this policy may not rear its head again. Sorry CBN, the second time is not the charm for e-verification.