Dr Emma Haiyambo, Director Department of Strategic Communications and Financial Sector Development
The Bank of Namibia has warned those who are involved in the R200 WhatsApp Stokvel to stop the activities or they will be fined N$1 million or imprisonment for up to 10 years or sentenced to both.
The warning came after the Bank of Namibia had investigated the R200 WhatsApp Stokvel that was trending on social media is a pyramid scheme.
“Those who choose to continue to participate would be liable to a fine not exceeding N$1,000,000 or imprisonment for a period not exceeding ten years or to both such fine and such imprisonment if found guilty,” Dr Emma Haiyambo, who is the Director Department of Strategic Communications and Financial Sector Development, warned on Wednesday.
According to Haiyambo said the stokvel contravened section 55A of the Banking Institutions Act, 1998.
Haiyambo also said investigations done by the Bank of Namibia revealed that participants were encouraged to recruit to become eligible to earn the promised income of N$1,200.
She further said that the scheme does not generate income through the sale of a product or service to participants.
“The joining fee worth N$200 payable by new participants is the only source of income for the R200 WhatsApp Stokvel,” Haiyambo stated.
She added that the N$200 joining fee is used to remunerate participants at the top of the scheme, which means that as soon as the recruitment of new participants stops, participants at the bottom of the scheme will not receive the promised income of R1,200.
In view of the above-stated reasons, she explained, the R200 WhatsApp Stokvel which requires promoters to recruit members of the public in order to make an income of N$1,200 contravene section 55A of the Act.
“Therefore, the promoters of R200 WhatsApp Stokvel are hereby directed to cease the operations and promotion of this pyramid scheme immediately.
“Failure to do so, the Bank will take further appropriate actions as stipulated in the Act,” she warned, further directing members of the public to stop participating in the business activities of R200 WhatsApp Stokvel with immediate effect.
How to identify a pyramid scheme
- The business offers you a chance to join a scheme, where you need to recruit new members in order to make money;
- New members sign up with a joining fee and may be required to continuously pay a subscription fee;
- The business might not offer tangible products/services;
- Your income is based mainly on the number of people you recruit and not on the sale of products to consumers;
- When the products are offered, they are used to cover the business operations, i.e. products offered might not be genuine and usually hard to value;
- Income is based mainly on the number of people you recruit and not on the sales of products sold to consumers.
