New financial scams are sweeping Kenya as authorities watch

On a December morning in 2007, Kenyans woke up to one of the country's biggest financial scandals. Hundreds of thousands of people had lost an estimated Sh8 billion to at least 271 pyramid schemes that collapsed almost simultaneously.

The largest, DECI Investments, reportedly swallowed between Sh2.4 billion and Sh2.5 billion from about 93,000 investors. For nearly three years, these schemes had operated openly, either as limited liability companies or Savings and Credit Cooperative Organisations (SACCOs), without attracting meaningful regulatory scrutiny.

Their business model was deceptively simple: use money from new investors to pay extraordinary returns to earlier investors, creating the illusion of a profitable investment until the entire structure inevitably collapsed under its own weight.

By the time public officials appeared to react, lives had been ruined. Families lost savings accumulated over decades, businesses collapsed, and despair spread across the country. As has often been the case, investigations dragged on, court cases faded from public attention, and victims eventually resigned themselves to their losses while those responsible for oversight quietly escaped accountability.

Nearly two decades later, history appears to be repeating itself.

A new wave of financial scams has emerged, this time disguised as online stock trading platforms. They recruit aggressively through TikTok and WhatsApp, using influential social media personalities to market what they portray as lucrative investment opportunities. Their primary targets are professionals in rural areas, including teachers, healthcare workers, county employees and small-scale traders.

The latest buzzwords are "copy trading" in United States stock markets. One company behind the current schemes claims to be registered in Colorado, United States. Yet the methods being used bear striking similarities to the pyramid schemes that devastated thousands of Kenyans between 2005 and 2007.

Although the Capital Markets Authority (CMA) has repeatedly warned the public against unlicensed online investment platforms, enforcement action appears largely absent.

A simple Google search reveals that several of these firms have already been flagged as scams operating across multiple African countries. Yet their promoters continue to recruit openly in Kenya, holding public meetings and aggressively marketing their products online.

Popular social media personalities openly promote the schemes, showcasing lavish lifestyles while claiming they are helping the government fight poverty.

Digital footprints suggest some of these operations have existed in Kenya since 2024, but their activities have accelerated significantly in recent months, prompting the CMA's latest public advisory.

The investment model itself raises immediate concerns. Participants are required to purchase an initial investment package worth approximately Sh65,000 (US$500) or multiples thereof. However, meaningful returns largely depend on recruiting additional investors beneath them — the defining characteristic of a classic pyramid scheme.

The obvious question is this: if regulators know these entities exist and have publicly warned against them, why do they continue operating freely?

Unholy coincidences

The similarities with the 2005–2007 pyramid scheme crisis raise another uncomfortable question. Is it merely coincidence that such schemes seem to flourish around election periods?

Investigations into the 2007 scandal linked several sitting and former Members of Parliament to collapsed pyramid schemes. Whether those links were incidental or indicative of broader political financing networks remains unresolved, but they continue to fuel public suspicion about the relationship between illicit financial schemes and election funding.

This week, INTERPOL ranked Kenya second in Africa, after South Africa, in detected cyber vulnerabilities and digital threats, driven largely by rising cases of mobile money fraud and SIM-swap scams.

Most economically active Kenyans can relate.

Personally, I have recently received multiple unsolicited M-Pesa prompts requesting my PIN to authorise transactions I never initiated.

My closest encounter with the latest online investment scams involved a platform masquerading as a specialist investment arm of one of Kenya's oldest and most respected stockbrokers, now an investment bank.

The fraudsters had built an impressive website claiming to operate as a specialised business unit reporting directly to the bank's Board of Directors.

The language was convincing. It claimed to serve high-net-worth investors, fund managers, corporate treasury dealers and special investment funds. It purported to facilitate private capital movements that would not disrupt secondary stock markets and even claimed to hold a special licence from the London Stock Exchange to intermediate private capital flows between Kenya and Europe.

The operation also had a functional trading application available on Google's App Store.

After registering on the website, prospective investors were invited into what was described as an exclusive WhatsApp group administered by senior investment advisers. Members were presented with supposedly exclusive investment opportunities accompanied by guaranteed buyers the following day.

Participants could monitor impressive account balances online and were constantly encouraged not to withdraw profits but instead allow the "magic of compounding" to multiply their wealth.

In reality, the money deposited into fraudulent bank accounts simply disappeared while the impressive online balances existed only on a screen.

Several warning signs became immediately apparent.

First, while joining the WhatsApp group was seamless, the telephone number administering it could not receive calls, responding only to text messages.

Second, whenever an adviser began demonstrating how the trading platform worked, the main WhatsApp group would suddenly fill with testimonials from supposed investors claiming to have earned millions within months. Genuine wealthy investors rarely advertise their fortunes in such fashion.

Third, after the training session, investors would immediately be directed to subscribe to a share offer supposedly closing that day. A highly "randomised" blockchain allocation system would then assign shares whose value curiously matched the amount the investor had earlier indicated they were willing to commit.

Once allocated, investors were instructed to transfer funds immediately via mobile banking or directly into designated bank accounts. The deposited funds would instantly appear in their online trading wallets, supposedly ready for highly profitable trading the following day.

Curiously, the bank account provided bore a completely different name from the advertised investment platform and was registered at a branch outside Nairobi, despite the genuine investment bank operating primarily from the capital.

Last week, the legitimate investment bank was forced to issue a public warning distancing itself from the fraudulent platform falsely claiming to be one of its business units.

Its statement reflected a troubling sense of helplessness. Beyond warning the public, little appeared capable of being done.

This raises fundamental questions.

Kenya has at least five financial regulators, alongside several investigative and intelligence agencies mandated to protect citizens from financial crime.

Is the Financial Reporting Centre, whose core mandate is combating financial crime, unaware of these operations? Can the National Intelligence Service and the Directorate of Criminal Investigations, institutions funded with billions of shillings annually, genuinely fail to detect organised criminal enterprises recruiting openly through social media? Where is the Kenya Revenue Authority in all this?

Ultimately, the issue extends beyond individual scams.

How can Kenya aspire to become Africa's financial and investment hub — let alone emulate Singapore's success — if organised financial criminals operate with apparent impunity?

More importantly, how can international investors entrust billions of dollars to a financial system that appears unable to protect its own citizens from increasingly sophisticated fraud?