A new breed of Corruption ; Pyramid Schemes are killing the economy
An unprecedented number of Kenyans have lost their money on the pyramid schemes. Most of these institutions have made many idle Kenyans fake their lives into working, at the end they sink with their hard earned savings. This is not a different name from corruption. Whereas corruption can be defined as embezzlement of public funds, a similar characteristic is peculiar with the pyramid schemes.
In Kenya, there are hundreds of such schemes in the market. With the recent downfall of ‘Amazon’ , which adds to the long list of such heaps, many Kenyans have been left with questions of how to gain back their investment. The constitution of Kenya, does not describe well effects associated with pyramid schemes, thus finds it hard to prosecute the cartels running such kind of businesses.
At least, three out of five Kenyans have had their share of experience on the effects of the pyramid schemes. It’s normal in Kenya to accept the unemployment rate is high. A quarter of the population in Kenya enjoys the wealth inherited, while the remaining three quarter is left to dig hard to fit in the competitive economy. This is the loop hole that these cartels running the pyramid schemes find their way in. With the increasing number of unemployment rate in Kenya, there is way too much idleness.
According to a report published by the Central Bank of Kenya early this year, many Kenyans have fallen scam on the pyramid schemes. Since Covid-19 struck last year, the country has been undergoing a severe tension on unemployment rates in the economy. The hard pained often find themselves on the hands of this con-men. It’s quite hard to accept that, some of these pyramid schemes are run by big names in the country, yet it’s hard to mention them.
Many students in universities desire to own property at quite a tender age without any struggle. Among other things, these cartels are using lucrative images, polished and spell instant success for the youth to lure these students and the wider idle population (unemployed) into their fake lies. The higher the fake promises, of high return at no risk whatsoever if you invest in a particular scheme the more the droves that rush to them. Some are asked to invest in an institution or scheme which is neither regulated by, nor registered with, a regulatory body. Promises of higher returns the more people you recruit into your investment scheme (which now designs the pyramid structure).
An investment scheme with extraordinarily high returns. The pressure to make an investment decision because the opportunity will close, or because the first investors made much higher returns than later investors. A guarantee of high returns, regardless of circumstances. The design and approach taken to reach Kenyans is just the same.
Many pyramid scheme institution often force their members to attend meetings where they are given false testimonials at the expense of gaining their trust. The growth in the economy is growing fast amongst this target group, and although the generation being misused ought to be in the market fighting to compete with other small and medium sized enterprises ( SMEs ) the reality is that they are yet again being blindfolded. The government of Kenya needs to set up laws, punitive measures that would shoulder the citizens against these economic growth saboteurs. The same way the whip cracked down on betting sites, it should be applied on the pyramid schemes.
In a report by the Standard Newspaper on 21st February 2021; “After losing billions of shillings to shadowy pyramid firms between 2005 and 2007, victims from 45 counties gathered together, collected evidence for eight years, and prosecuted their case for five years. The 40,000 victims had lost about Sh4 billion in total in the questionable investment schemes. But the petitioners who went to court were just a fraction of Kenyans who lost Sh8 billion in the scam.”
If by any chance these victims had families and depended on the reprieve by the courts, they must be suffering now. It is painful to spend over a decade on a court case trying to follow up your money yet a cartel somewhere is running and flourishing with your money. The economy cannot be in balance if the National assembly can’t pursue on the matter further. The only amendment that could help many Kenyans suffering in poverty not to continue losing their savings to some few cartels in the country.
The funny bit of these pyramid schemes, is that, some of the bigwigs doing these businesses are not even Kenyans. Some have found a sliding pass in Kenya just to benefit their overseas investment. These private investors have the entities registered as limited liability companies, trusts, sole partnerships, businesses, welfare associations, non-governmental organisations, foundations, ventures, investments, micro-finance groups and savings and credit societies.
With such kind of perimeter the government cannot intrude, According to the State, since the investments are a matter of contracts between the investors and enterprise owners, it should have been obvious to the victims that the schemes were fraudulent. The clarity of this in the law of Kenya demeans the protection of almost 50 million Kenyans. It’s should not be a matter of hide and seek anymore. Many young generation are losing track thinking that these pyramid schemes would benefit them, and it has been a trend, such that they open and once a blow up of sign-ins is registered the owners slide away with the money used as registration and referrals.
Most Kenyans are suffering, all the way from small businesses to already established business, everyone has testimonials of such an experience. Not unless the law is crafted to trap the traffic on these scammers, the fate of ignorant poor Kenyans in business is going to die a painful death.
Compiled in Mombasa, Kenya.