The Central Bank of Kenya on Friday warned of pyramid schemes in the country masquerading as savings and credit societies.

central bank kenya
Central Bank of Kenya
The entities are taking cash from the public by asking them to save or invest with them so that they can get higher interest or buy houses/land only to go under after few months.

At least three such outfits have been reported to have collapsed with members’ money since the beginning of the year leaving many distraught.

“The Central Bank of Kenya (CBK) and the Sacco Societies Regulatory Authority (Sasra) wish to draw the attention of members of the public to the re-emergence of unlicensed deposit-taking entities and Ponzi/pyramid schemes,” said the CBK in a statement Friday.

The regulator noted that the entities were asking citizens to invest with them, promising quick and abnormally high returns on their money or acquisition of non-existent properties.

“Members of the public should exercise caution and ensure they place their funds with credible and duly licensed deposit-taking institutions. The list of licensed deposit-taking financial institutions can be obtained from CBK’s website,” said the bank.

Kenyans have a long and bad history with Ponzi schemes, which over five years ago swindled citizens reportedly 800 million U.S. dollars, which to date has not been recovered.

The losses destroyed families and led to several deaths as some people invested their lifetime savings or gratuity after quitting work.

Analysts noted that while Kenya has a vibrant financial sector, there are thousands of many people who cannot access financial services making them vulnerable to such schemes. Besides that, citizens are conned due to desire for quick riches. Enditem

Source: Xinhua/NewsGhana.com.gh