Tom Transfers’ facility, September 2022
KIGALI – An increase in financial scams such as pyramid and Ponzi schemes, which promise high returns on dubious investments, prompted Rwanda’s central bank earlier this year to issue a stark warning against such risky bets.
In the Feb. 13 communique, the central bank cautioned the public to be on the lookout for companies it warned were posing as business entities registered with the Rwanda Development Board (RDB), a government institution focused on boosting the private sector. The companies, it said, invested in fraudulent schemes, meaning they shift money among investors until the pool of recruits runs out and the money disappears.
Both pyramid and Ponzi schemes are illegal in Rwanda, one of a growing number of countries in sub-Saharan Africa cracking down on financial scams and illicit funds.
In March, the global policing agency, Interpol, said authorities in seven African countries, including Rwanda, arrested 306 suspects and seized 1,842 devices in an international operation targeting cyber-related scams. The arrests were part of Operation Red Card, which sought to disrupt and dismantle cross-border criminal networks which had scammed more than 5,000 victims, Interpol said in a statement.
Pyramid schemes usually entail membership-based operations in which individuals pay fees to join. Those who join the scheme first benefit from fees paid by others. The scheme collapses when there are no more new investors.
Meanwhile, Ponzi schemes pay returns to investors out of money invested by new investors. Usually, investors believe their money is being used to finance legitimate profit-making businesses. The scheme collapses when it is unable to secure sufficient new investments to service returns.
The schemes initially grow quickly by promising higher returns to those who bring in new investors, usually their friends and family.
“The investor promises tempting profits within three to six months, to an extent that any person who joins is excited to invite their close relatives and friends to follow him,” Gerard Nsabimana, director of market conduct at the Rwanda Central Bank told KT Press.
Gerard Nsabimana, director of market conduct at the Rwanda Central Bank
“Any new shareholder will invite family members, church-mates, work mates and other close friends to join,” he said in an interview. “The so-called investors risk nothing, they pay the first shareholder from the share capital of his successors, and so on and so forth.”
Nsabimana cited the case in Rwanda of Tom Transfers, a company sued by 200 people who claimed they paid the firm for imported cars they never received. Some investors said the company would receive the cars, but rented them out.
“All hope to recover our money has gone,” Line Dusabimana, who lost Rwf 20 million in the Tom Transfers scam, told KT Press. “We learned that the owner fled the country with our money. It looks like he is a ghost that cannot be traced.”
Jean Damascene Ngiruwonsanga, a former spokesman for Tom Transfers, told KT Press he never knew why the company went out of business. “We only woke up to hear that the boss absconded. We closed the business and went to find other jobs,” he said.
In another case, the central bank issued a warning about a company, Deere Equipment Company, which claimed to be a branch of the U.S.-based agricultural manufacturing firm, John Deere, offering agricultural equipment in Rwanda. The company claimed to work with One Acre Fund, which in October 2024 issued a statement calling it a scam.
Nsabimana, from the central bank, said Deere Equipment quickly changed its profile and resumed its fraudulent practices by telling investors it had “fulfilled requirements from the central bank so you can proceed now.”
Once companies are blacklisted, many re-emerge under a different name, he said.
“Some of them, when they are questioned, they take a strategic break of one week and come back with a message to the public, we spoke with the governor of the central bank, we now complied with regulations, we are good to go,” said Nsabimana.
Emily Mutesi, a radio journalist from Nyarugenge, recalled how a colleague tried to recruit her to join a pyramid investment scheme.
“He said look, here is a good basket of money. I can’t wait to login and start, provided that it does not deceive me like the previous one,” Mutesi said.
“For me I refused because my faith does not allow me to go into those things,” said Mutesi.
Mutesi’s colleague, who asked not to be named because he feared reprisals, denied trying to recruit her, but acknowledged he was involved in online forex trading. Many people who’ve reported losing money to scams are often not willing to talk because they fear arrest.
‘Shine for Glory’ scheme
One of the best-known pyramid schemes in Rwanda in recent years was called Shine for Glory, where individuals had to raise Rwf 500,000 ($354.81), which is more than the salary of a government worker.
“We were nearly five hundred people,” recalls Eric Niyonzima, who became a member of the scheme. “One had to register with Rwf 500,000 and once there were six investors, the money was given to the first investor,’ he added.
“After a couple of months, we got stuck because some of us were not able to recruit more people, which means that at a certain level, we did not get our money back, leave alone getting the capital multiplied.”
Niyonzima said he earned Rwf 3 million from the first investment round and was interested in continuing but the scheme fell apart. “It became a quarrel,” he said.
Thierry Murangira, spokesman for the Rwanda Investigation Bureau (RIB) told Rwanda Television that between 2019 and 2024, the bureau had 12,178 cases involving 14,991 suspects.
In August 2021, four women in Rusizi district in Rwanda’s Western Province assaulted a judge for releasing on bail a suspect who had invited them to join a pyramid scheme code-named Blessing. They were sentenced to one year in jail and fined Rwf 1 million each.
CENTRAL BANK INTERVENTIONS
Ruziga Emmanuel Masantura, an economist from RNIT Iterambere fund, said the central bank should inform the public which investment platforms to avoid..
“There is need to sensitize people, so that they know which platforms are genuine, which ones should be avoided,” Masantura said. “If need be, the Central Bank can initiate a training of trainers in cryptocurrency so that people don’t continue to get lost.”
Central Bank of Rwanda
Meanwhile, the central bank has started consultations for the creation of its own cryptocurrency, which will help Rwandans invest with confidence, he said.
This, according to Nsabimana, will help Rwandans invest with confidence. For Masantura, “the central bank is actually taking long; people need rules and regulations and knowledge that will allow them to choose between the good and the evil.”
“In the past, conning was a business of the vulnerable, illiterate. Now, smart ones use Artificial Intelligence to steal, even church pastors can now advertise ill-intended platforms,” he said.
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