The Independent (Kampala)
21 December 2011
Bank of Uganda is warning the public against the existence of pyramid/gift circles schemes operating in Uganda which according to the bank are operating on a weak background and can collapse any time and cause heavy loses to the participants.
The Bank passed on the warning through a statement dated Dec19. Below is the warning statement:
Bank of Uganda has been alerted of the existence of an active pyramid/gift circle scheme operating in Uganda using, inter alia, the banking and financial system to mobilize funds from the general public.
The pyramid/gift circle schemes claim to be duly registered businesses presenting a business opportunity that requires a client to pay money into an account in order to promote the activities of the circle which rewards the participants of the circle with similar payments for marketing the circle to more clients.
This pyramid scheme/gift circle uses old members to recruit new members and new recruits deposit specified amounts of money into each participant’s account and a fee into the pyramid/gift circle’s account for up to 5-7 levels of recruits.
There is scanty information given to clients/members, save for the claim that the scheme is a legitimate income generating activity (network marketing program) without disclosing the underlying business. The pyramid scheme(s)/gift circles use the premise that the payments are ‘authentic’ because they are made into a bank and/or Microfinance Deposit taking Institutions (MDIs) account and that all one needs to know is that the scheme works and that it can make one rich’.
Uganda has witnessed other pyramid schemes that collapsed in 2003 and 2009 with a resultant loss of millions of shillings to unsuspecting public.
The general public is strongly advised that they risk loss of their money deposited or placed with the pyramid schemes and gift circles operating with banks, credit institutions and MDIs.
Bank of Uganda will not protect any person who deposits money with the pyramid schemes/gift circles or with a person who is not licensed to take deposits or who aids and abets crime and the perpetuation of fraud in the financial sector.
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