The Direct Selling Association (DSA) of South Africa is seeking the commitment of the African Union (AU) to launch a continent-wide mission focused on stopping Ponzi schemes and fraudulent investors who promise unrealistic returns in exchange for money.
“The DSA has noted with concern the increasingly cross-border nature of Ponzi schemes,” says DSA chairperson Rajesh Parshotam. “Africans are increasingly becoming targets of Ponzi schemes hatched-up in foreign lands to rob the continent of scarce resources.”
Africa’s growing middle-class and increasing disposable income are paired with an underdeveloped justice system, making the rise of corrupt investment opportunities disguised as network marketing even more dangerous because of a lack of accountability. The AU also recently announced the introduction of the African passport, which is expected to increase intra-trade on the continent.
“The continent can’t afford to have another exodus of capital without the concomitant exchange of value,” Parshotam says. “We should be equally vigilant in disrupting the forces that are at the forefront of yet another scramble for Africa that could result in zero economic benefits to the continent. The direct selling industry has few barriers to entry. This is one of the reasons for its growing popularity on the continent.”