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Thursday 21 February 2019
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Poverty contributes to pyramid scamming

Bank of Namibia spokesperson Kazembire Zemburuka has confirmed a BON investigation into a number of suspect financial scams.
The investigations come after several media reports about alleged pyramid schemes such as MyLife Change 247 and also recently the Chinese company LongRich.
A member of LongRich who asked not to be quoted said that Bank of Namibia had contacted them on Wednesday to request for a meeting in an attempt to decipher the business model and operations of the Chinese company.
LongRich distributes a variety of household cleaning products and personal care products while MyLife Change 247 promises high returns on investments over a short period of time.
The Bank of Namibia after an investigations into MyLife Change 247 last year, found that it was in violation of the Section 5 (1) (b) and 55A of the Banking Institutions Act (no.2) of 1998 and that the business model is not sustainable.
Many pyramid schemes, according to some business people have targeted members in the lower income communities.
A business woman who requested anonymity that The Patriot spoke to said that pyramid schemes usually target those who fall in the poverty bracket or people who are in the really lower income groups because they feed off of their desperation to get out of poverty.
“People are extremely desperate to get out of poverty. With the current economic situation in the country, times have become even tougher.
Imagine if the middle-income individual is forced to tighten their belts, what more is the poor man and woman expected to do when their belts are already at their tightest” the business woman said.
She added that it is only natural for a person to fall prey to a scam if there is no other hope or when their current economic circumstances are bleak.
Not only are people falling victim to the different scams seen as a result of poverty, it is also a further contributing factor to poverty rising.
According to the Namibia Statistics Agency 125,425 out of 544,655 households have outstanding loans and debts.
The highest type of debt is with cash loan sources in Namibia, second highest is vehicle loans followed by furniture debt and then housing bonds and loans from outside the borders of Namibia.
Oxfam International last year published a report stating that over the past 30 years, the gap between the rich and poor has widened in many countries across the world.
According to them, since 2001, the poorest half of the population have received just 1% of the total increase in global wealth, while the wealthiest individuals who constitute just 1% of the global population have received 50%.
The Commitment to Reducing Inequality Index of 2018 that was released last year said that Namibia remains one of the highest ranked African countries in terms of inequality and is fifth among the middle income countries.
The index further reported that Namibia is one of the most unequal countries in the world, but has a high score for commitment to reducing inequality.
A member of LongRich said that while the business is a working model and a non-pyramid scheme, there are individuals who may want to use the business as a scam.
The member said that people fall victim to being defrauded because they do not read or make an effort to understand the business model of LongRich.
She also said that many people are desperate to make money overnight and this results in them falling victim to scams.




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