How to Avoid Scams and Fraudulent Investment Schemes in Nigeria: A Guide for the Diaspora

For Nigerians in the diaspora, investing back home can be a great way to build wealth and contribute to national development. However, the risk of scams and fraudulent investment schemes is real, and many have lost significant amounts of money due to poorly vetted or outright fake investment opportunities. This guide will help you identify red flags, conduct due diligence, and protect your hard-earned money.

Common Investment Scams Targeting the Diaspora

Real Estate Fraud

• Fake land or property sales: Scammers sell land they do not own or resell the same property to multiple buyers.

• "Omo-onile" scams: Local land grabbers claim ownership of sold land, demanding more money.

• Unfinished housing projects: Some developers collect deposits but never complete construction.

Ponzi and Pyramid Schemes

• Investment programs that promise unrealistic, high returns in a short period.

• Heavy focus on recruiting others to join rather than actual business activities.

• Examples: MMM, Loom, and similar get-rich-quick schemes.

Fake Agricultural Investment Schemes

• Some platforms claim to invest in farms and agribusiness, promising fixed returns but operate as Ponzi schemes.

• The company lacks physical farms or verifiable partnerships.

Forex and Crypto Trading Scams

• Fraudulent trading platforms or account managers who claim to double investments.

• No clear regulatory backing or track record of real transactions.

Stock Market Manipulation Scams

• "Pump and dump" schemes where scammers artificially inflate stock prices before selling off and leaving investors with worthless shares.

Fraudulent Crowdfunding and Charity Investments

Some fake platforms collect funds for business startups or social causes but disappear after raising money.

How to Protect Yourself from Investment Scams

1. Conduct Proper Due Diligence

• Before investing in any business or project in Nigeria, verify its legitimacy:

• Check registration status: Ensure the company is registered with the Corporate Affairs Commission (CAC) (www.cac.gov.ng).

• Verify licensing: For financial investments, check with the Securities and Exchange Commission (SEC) (www.sec.gov.ng).

• Investigate the company’s track record: Look for reviews, testimonials, and evidence of past successes.

2. Avoid Get-Rich-Quick Schemes

• If an investment promises very high returns with little or no risk, it is likely a scam.

• Legitimate investments come with risks, and profits take time to materialize.

3. Demand Proper Documentation

• Always request contracts, receipts, and official agreements before sending money.

• Have a lawyer review documents before signing anything, especially in real estate transactions.

4. Insist on Face-to-Face Verification

• If possible, visit Nigeria to inspect properties or businesses before committing funds.

• Alternatively, have a trusted representative (lawyer, family member, or financial expert) verify the investment.

5. Use Escrow or Secure Payment Channels

• Avoid sending money directly to personal accounts; insist on corporate accounts tied to registered businesses.

• Use reputable financial institutions or escrow services to hold funds until agreed conditions are met.

6. Research the People Behind the Investment

• Check the background of the founders, CEOs, and key personnel.

• Look for their past projects and whether they have been linked to any fraudulent activities.

7. Get Legal and Financial Advice

• Consult with a Nigerian legal expert to understand the investment risks and legal implications.

• Speak with a financial advisor to ensure the investment aligns with your long-term goals.

8. Be Wary of High-Pressure Tactics

• Scammers often create false urgency to push investors into making hasty decisions.

• Take your time to evaluate the opportunity properly.

What to Do If You Suspect a Scam

Report to Authorities

• Economic and Financial Crimes Commission (EFCC)

• Securities and Exchange Commission (SEC)

Warn Others

• Share your experience on social media, investment forums, and with fellow diaspora Nigerians.

Take Legal Action

• Engage a lawyer to explore possible legal remedies if you've been scammed.

Investment in Nigeria can be rewarding, but it requires caution and thorough research. Always verify before you trust and never rush into an opportunity that sounds too good to be true. By following these steps, diaspora investors can protect their funds and contribute meaningfully to Nigeria’s economic growth.