HOW TO USE PONZI AS AN ETHICAL BUSINESS MODEL.

A Ponzi scheme is a mechanism also called ‘wonder banks’ where a business takes money from a set of people to provide cash flow for others. Over time, it’s like ‘taking from Peter to pay Paul’. It is a fantastic model that governs the core of EVERY BUSINESS but in Nigeria and several parts of the world, this has been grossly abused and misrepresented.

PONZI SCHEMES ARE NOT BAD IN THEMSELVES. EVERY BUSINESS USES PONZI MECHANISMS IN SOME WAY.

This scheme was popularized in 1949 by a man named CHARLES PONZI.

Let’s look at examples:

1. Banks take deposits from you, service your deposits, and use your money to pay other depositors. It is new money that is used to pay old customers. It is a revolving activity. Sometimes, when you go to the Banking hall, those who are there to deposit are prioritized so that those who are there to withdrawal can have cash to take home. Boom!!! Ponzi has happened.
2. During the COVID-19, one of our high networth individuals (HNIs) at SOBCA had a medical crisis and she demanded a refund of payments she had made to our business before the lockdown. It was such a short notice that destabilized our business.. but we got new payments for new services and with that we paid the customer. Boom!!! Ponzi happened.
3. Artificial Intelligence (AI) driven apps like PiggyVest, Cowry-Wise, and even AgroTech solutions sometimes all pay interests and returns from new investments.

This is the rule: USE NEW MONEY TO PAY OLD CUSTOMERS.

There is nothing wrong with this model, if it is ethically and professionally used.

I hope this helps you.

m a k t u b!!!

SO