For many Kenyans, especially the urban youth, the allure of quick wealth through flashy apps and online schemes is tempting. The promise of doubling money overnight, with minimal effort, is hard to resist. Yet, history and experience teach us that genuine wealth is built over time.
The line between investing and gambling has become dangerously blurred. Real investments are built on sound business models, regulatory oversight, and risk disclosure.
What we’re seeing today is something else entirely; betting on platforms whose success depends on continuous recruitment rather than genuine value creation.
If you are promised a percentage of daily returns, guaranteed profits, or high referral bonuses with little explanation of how the money is made, you are not investing. You are gambling.
These schemes often follow a similar pattern. Early users are shown inflated returns to build confidence and trust. Then comes the viral recruitment-driven growth where referrals and multi-level marketing become the real engine.
While Artificial Intelligence (AI) has revolutionised the financial sector positively, it is also being exploited to open-up avenues for sophisticated scams.
Regulators have raised alarms about the growing use of AI to deceive and defraud unsuspecting victims. Fraudsters often use sophisticated tools to lend an air of legitimacy to fraudulent schemes, but which are rarely verifiable. Once withdrawals exceed deposits, the platform freezes or disappears, leaving users stranded.
As you consider investment options, and before committing your hard-earned money, always take time to understand the business model behind any platform.
A legitimate investment should have a clear and transparent way of generating income, be licensed or regulated, and offer returns tied to real economic activity.
You should also be able to verify who is behind the platform. Traditional financial institutions operate on clear models. Saccos, for instance, earn by lending to members and charging interest. Banks invest in treasury bonds and other instruments, generating income through interest and dividends.
In contrast, many modern digital platforms lack clarity. They often rely on user deposits to pay returns, a model unsustainable in the long run. Without a clear source of income, such schemes are bound to collapse, leaving investors in distress.
Generally, relying on a single avenue is risky. If, for instance, you fully patronise sacco investments, and benefit from loan access and dividends, it's wise to explore other investment avenues such as money market funds, that provide liquidity and modest returns.
With 4.7 million Kenyans facing substance abuse issues and a growing number turning to online gambling, the government has stepped in rolling out a multisectoral response including public awareness campaigns, rehabilitation coverage, and mental health support. It’s a commendable step.
However, government intervention alone is not enough. Citizens must also take responsibility for protecting themselves. This begins with vigilance and informed decision-making.
The role of financial literacy cannot be overstated. The sooner we stop romanticising quick money, the sooner we can build meaningful wealth.
Engaging in platforms without understanding their operations is akin to gambling. It's essential to educate oneself, seek advice, and critically assess opportunities. Remember, the goal is sustainable wealth, not fleeting gains.
The writer is a communications specialist in the banking sector.
