It’s not a get-rich-quick scheme. It’s “get-rich-quicker” through systematic, effort and the compounding of effort through groups of people.
That’s from the slick marketing of TwinKas, a very popular online “investment” plan in Nigeria. Like MMM before it, this is essentially a ponzi scheme which promises unbelievable rates of return via a system which relies on regularly recruiting hundreds of new “investors” to keep it running. Despite the stories of such programs eventually collapsing, and thousands of Nigerians losing money, there’s never a shortage of other people willing to enroll when new schemes pop up.
Meanwhile in Kenya, which is well-known as a mobile-first nation in financial technology, it turns out one of the first reasons some Kenyans buy smartphones is so they can use their phones for online betting, according to a new study backed by the Bill & Melinda Gates Foundation. Kenyans said they used winnings to furnish their homes or buy new electronics but, unsurprisingly, also admitted they lost more than they won.
Gambling is also big in Uganda. The bets are mainly on soccer at local betting shops which have been popping up in big cities there since rules were relaxed. But now, some local governments are getting worried that so many young people are hooked.
Like many sub-Saharan African countries, Nigeria, Kenya and Uganda have many unemployed people and, crucially, a lot of those unemployed people are young and digitally-savvy.
Nearly 50% of Nigeria’s youth labor force was unemployed or underemployed in the third quarter, according to the nation’s statistics bureau. In Kenya, youth unemployment is estimated to be around 35% (pdf). And Uganda, where some three-quarters of the population is under 30, around 22% of those aged 15-24 are unemployed.
With insufficient options for formal employment and banks which lend at extremely high rates, it’s not too surprising fun pastimes like gambling on soccer matches are engaged as serious economic activity by ordinary people.
There are many positive things about technology making the world a smaller place and a more level playing field. The problem here is that the technology and access make it easier for one side of the equation to exploit the other. For example, some of the different branded Nigerian investment plans are run out of the same address in the United Arab Emirates.
Awareness programs about the dangers of gambling and ponzi investing are to be encouraged but many young people will ignore them while they have few realistic economic options.
Credit : Yinka Adegoke, Quartz Africa editor