Introduction
From Productivity to Predation
One of the most uncomfortable truths about Nigeria’s economy is that a large share of wealth creation is no longer anchored in productivity, innovation, or value creation. Instead, it is driven by access, deception, the systematic extraction of public resources and fleecing of fellow citizens. Scams are no longer fringe criminal activities; they are embedded in how institutions function, how governments generate revenue, and how many citizens navigate everyday economic life. Scams now take many forms, from obstruction of due process; deliberate creation of bureaucratic bottlenecks to extract bribes; sabotage of government functions to create dysfunction and expenditure opportunities; brazen neglect of duty while pursuing private business; hoarding and artificial scarcity; extortion by security agencies; and inflation of prices during festive periods, to kidnapping. It is no longer news that the two dominant economies today are kidnapping for ransom, banditry and terrorism. The political economy of these three reveal them as money spinners from which a network of political, military, cultural and religious entrepreneurs benefit. Particularly, banditry has a strong support base in illegal mining of solid minerals, religious politics and struggle for political power. From “Yahoo training schools” and the supporting Yahoo parent associations to corrupt unions, exploitative cooperatives, overpriced consumer goods, and businesses fronting for powerful political actors, fraud has become systemic. Fraud is no longer a deviant behavior, it has become a cultural norm, political necessity, religious duty, pathway to cultural and political leadership and a distinct lifestyle.
What has emerged is a scam economy, a system in which governance, business, and survival are deeply intertwined with fraud and rent-seeking. While opportunism may be a human trait everywhere, what is distinctive about Nigeria is the near-total absence of consequences. In such an environment, dishonesty is rational, and integrity is penalised.
I. The Structure and Evolution of the Scam Economy
A Blurred Political and Economic Order and a Collapsed Boundary Between State and Market
Functional economies are segmented: public and private sectors have clear boundaries; regulators are distinct from operators; law enforcers are separate from law breakers. Nigeria, by contrast, resembles an orange; everything bleeds into everything else. There is no clear dividing line between public officials and private actors; regulators and business owners; or law enforcers and offenders. Nigeria has been described as an elephant: big enough to be eaten by many, resilient enough to absorb abuse, too rich and too large to fail. This mentality forms the foundation of the scam economy, where the state is seen not as a public trust but as an endlessly exploitable resource, a carcass available for carving.
Some Iterations of Scamming
Nigeria has experienced several waves of scam-driven accumulation. From Ponzi schemes and failed finance houses, to the corrupt transfer of public assets to politicians through phony privatization, and recapitalisation exercises of banks that allowed new-generation banks to swallow older institutions; use of failed banks used to scam the ordinary citizens of their years of savings; bad debts schemes, where huge loans borrowed by influential persons and board members are written off; and the use of bank funds by board members to build real estate which is then rented by same banks at exorbitant rates, among others. Each iteration is adapted to regulation without altering underlying behaviour. In Yoruba parlance, many of these schemes are described as “using Abu’s money to entertain Abu.”
Land and real estate scams followed a similar trajectory: from land grabs by indigenous youth supported by traditional rulers, to self-allocation by corrupt housing officials; demolition of slums without compensation and reallocation of the land to powerful entities; outright acquisition of public spaces, buildings and forest reserves by governors, and now to sophisticated estate development scams presented as land and property acquisition financing. Real estate has become one of the most visible repositories of illicit wealth. Luxury homes are built or acquired and left unoccupied, functioning as vaults rather than productive assets. Hotels, private universities, and other enterprises are frequently used as fronts, often run by friends or relatives. These ventures rarely aim at efficiency or service delivery; their primary function is laundering and storing stolen wealth. Organized criminality by faceless groups is ubiquitous. These groups which go by different names in different locales obstruct infrastructural and business development, engage in extortion and robberies. In some places, they are called youth, in others area boys, bush inspectors, youth gangs or cults. The pattern is consistent: scams evolve faster than accountability.
II. Governance, Daily Life, and the Cost of Normalised Fraud
Governance as Extraction
The operation of governance increasingly resembles an organised scam in which citizens are treated like milk cows. Government support for business development is selective and self-serving; officials intervene only when they have personal interests or can use Special Purpose Vehicles to extract public funds. Infrastructure projects are driven less by public need than by political repayment and election financing. Roads, bridges, and airports are built to repay campaign debts or raise funds for future elections. Old infrastructure is abandoned, uncompleted projects proliferate, costs are inflated, and execution is poor. One tragic aspect of this is that government officials profit from social investment funds to alleviate poverty, embezzle funds meant to support victims of terrorism while regularly subverting investors.
For many of Nigeria’s elites, government remains the most reliable source of wealth. Senior civil servants organise overseas travels to claim estacodes in foreign currency. Many are hardly in their offices, perpetually in transit like gypsies. Contract over-invoicing is rife, and officials set up proxy companies to siphon public funds. Contractors are routinely extorted, with supply costs sometimes inflated by more than 50 percent to accommodate extensive kickbacks down the line. Tax agencies routinely rip off government through tax scams. They provide businesses with tax assessments which they renegotiate and collect significant percentages into private accounts. Everyone is happy; government loses. Funding support agencies in higher education are among the worst scammers. A ring of contractors fronts for powerful entities and execute contracts so poorly done that one wonders if the institutions still have souls. As if that is not enough, staff of some outfits collect kickbacks on research grants.
Education, Regulation, and Institutional Hypocrisy
In education, government is often the greatest scammer. Public primary and secondary schools have collapsed into dilapidation in spite of massive funding through UBE and numerous intervention and specialized MDAs, yet the same government aggressively regulates private schools. Regulatory processes have become euphemisms for extortion rather than quality control. Government criminalises “fake” universities, local refiners, or adulterated products without addressing the real causes: scarcity, exclusion, excessive costs, and regulatory barriers. Nobody fakes what is not in demand. Faking is evidence of undersupply and structural and systemic failure, yet the response of government is policing rather than reform. Public hospitals are substandard but never shut down. Police vehicles are unroadworthy, yet road safety standards are weaponised against citizens. Public officials live large while demanding austerity from the masses. Okada riders are banned from roads, hawkers are routinely hunted by government officials because they are said to constitute public nuisance, but without addressing escalating poverty and collapse of public transportation which are responsible for the problems. Government fakes governance and adulterates democracy without consequence.
The Parallel Economy of Fake and Adulterated Products
Nowhere is the scam economy more lethal than in food, drugs, and consumables. Alongside a weak formal sector exists a vast, virtually unregulated informal economy. Local food vendors and restaurants operate without meaningful oversight as long as they pay taxes and “settle” local government and state officials. Food, fruits, meat, and vegetables are routinely preserved with harmful chemicals. Roadside vendors use chemicals to ripen fruits; analgesics are added to hasten cooking; cassava processing time is shortened by adding detergents; dangerous pesticides and white cement are used to preserve grains; meat and fish sellers use enzymes and formaldehyde as preservatives. Palm oil is reddened with red oxide paint. Palm wine is diluted and sweetened with saccharine. Herbal remedies often contain little or no herbs, consisting instead of random pharmaceutical mixtures. For nearly every non-consumable product, there are at least two versions: an overpriced “original” and a cheaper alternative described as Chinese, Taiwanese, Aba-made, or some other label. In reality, both are frequently substandard and produced specifically for the Nigerian market. There is hardly anything made to last. Regulatory bodies operate largely in name. Standards agencies and food and drug authorities have perfected the ritual of highly publicised raids, while the lifestyles of their staff reveal the racket behind the spectacle. In all these, consumer protection has become a stage show. The Nigerian market has become a killing field; hospitals, the burial grounds.
Why Adulteration Persists
The critical question is why faking and adulteration persist despite the ubiquity of regulatory agencies. The culture of adulteration is pervasive. Market measures are manipulable; the absence of scales and standard weights enables sleight of hand. Industrial packaging is equally deceptive; sizes shrink, prices rise, and packaging becomes more attractive. Shrinkflation is now standard practice. While government laments unemployment, it actively subverts local innovation in the name of fighting faking. Crude oil refining, fake universities, and counterfeit pharmaceuticals all raise the same question: why the faking? Regulations exclude participation and hinder innovation, creating a business environment where even those with capital and competence are locked out. Illegality becomes the only entry point.
Dysfunction as a Business Model
Dysfunction is good business in a scam economy. Crises justify spending, and chaos creates extraction opportunities. More terrorism leads to more military spending; more military spending creates business for the Generals, the boys and others in the sector. Political chaos creates environment for “settlement” and new appointments to placate the aggrieved; more violence, more money for the police. Despite pro-investment and growth rhetoric, government behaviour often destroys private enterprise. Officials swarm new businesses with taxes and levies, strangling them at birth. The aviation sector illustrates this clearly: airline tickets are burdened with excessive taxes, passengers receive poor service, and airlines lack the margins needed to invest. At the centre of this dysfunction lies the routine theft of public funds.
Elite Capture and Bureaucratic Scams
For many elites, government remains the most reliable source of wealth. Senior civil servants organise foreign trips primarily to collect estacodes, spending more time in transit than at work. They spread ridiculous training around for other categories of staff to widen the net of illicit gains. Contract inflation is standard practice, with officials setting up proxy companies to siphon funds. The ‘pay-per-play’ model drives appointment to public office, where appointees to office have to part with huge sums to obtain public office. Contractors are extorted, often inflating costs by over 50 percent to accommodate kickbacks. Tax agencies run parallel operations; negotiating assessments, collecting official payments, and diverting portions into private accounts. Politicians institutionalise self-payment through bloated salaries, allowances, outrageous sums for constituency projects, and inflated contracts. Oversight functions are weaponised to extract rents rather than enforce accountability. Institutions meant to safeguard integrity such as anticorruption outfits, audits, payroll offices, regulators often operate as toll gates. Queries are raised not to correct wrongdoing but to negotiate bribes.
Corruption in Employment, Training, and Social Programmes
Employment processes are deeply compromised. Jobs in universities and the civil service are monetized; either sold or reserved for relatives and allies. Recruitment exercises become rituals, elaborate performances with predetermined outcomes. Access consistently outperforms competence. Even public-good initiatives are corrupted. Corporate social responsibility programmes, training workshops, and research grants are used to siphon funds. CSR scams take the forms of promises that are not redeemed, sometimes huge amounts are announced and signed for but only a fraction is actually released. Values of donated buildings, facilities and equipment are exaggerated. Actual cash redeemed is often far less than what is publicly announced.
Of course, overseas training for chief executives, LGA members, and wives of politicians are a regular feature of the scam economy. These trainings are euphemisms for government funded tourism. In many instances the training trips are spent in shopping malls, lobbies of hotel brands, and photo ups in stairways of renowned institutions. Workshops are budgeted for but not held, and end-of-year trainings become rituals for draining unspent funds. Government officials and academics characteristically write reports and communiqués of workshops before the events begin, and meetings are held merely to fulfil all righteousness. Thus, “capacity building” becomes an annual ritual of plunder. Government funding of religious pilgrimages is the elite version of social investment scheme, Government funding of mass weddings, subsidy of transportation during festive events are mere spending scams. What is declared is far more than what is actually spent.
Everyday Scams and Moral Collapse
Beyond government, scam practices saturate daily life. To build a house, you have to be prepared to lose at least 40 per cent of the actual cost to bricklayers and other artisans. If you own a business, you lose your profit to the scams of your employees. Owners of transport businesses are frustrated out by fraudulent drivers in cahoots with mechanics. It would seem that the real trade learnt by artisans is fraud and deception is the major training that apprentices acquire rather than any skills of trade. Ponzi schemes repeatedly collapse and re-emerge. Market and drivers’ unions, and many labor unions operate like occult cartels. Leaders of consumers cooperatives collude with supervising government officials to defraud members through clever schemes. Executives of many community-based and landlords’ associations, as well as parents-teachers associations embezzle funds without consequences. “Yahoo Yahoo” has become a rational survival strategy for excluded and unemployed youth. Banks impose excessive charges; insurance schemes deliver minimal value while enriching powerful interests.
While we often argue that the absence of capital is the primary challenge for small businesses, it is rather clear that the real economic obstacle is the integrity deficit. There are Nigerians with funds to invest but are afraid of being duped. There are others who have been forced to shut down by fraudulent workers and extorting officials. Capital is available but integrity is in short supply. In this situation, we have record unemployment and severe problems of economic growth. In a scam economy, everyone complains about the country, the leadership and everyone else, but the real issue is the collapse of trust. In real economies, the currency of transactions is trust. Nigeria increasingly resembles a cartelised state, where organised groups capture institutions. The most dangerous consequence is moral. When scamming becomes normal, honesty appears naïve, hard work unrewarded, and integrity irrelevant.
III. Conclusion: Choosing Between Cartelisation and Reform
The most dangerous consequence of the scam economy is not financial; it is the collapse of trust. When scamming becomes normal, honesty begins to look naïve and hard work irrelevant. Young people quickly learn that connections matter more than character and access matters more than ability. Trust in institutions collapses, cynicism becomes a survival strategy, and the social contract quietly dissolves. This trajectory is not inevitable. A productive economy requires that scamming be costly and integrity rewarded. This requires more than anti-corruption slogans. It demands transparent budgeting, open contracting, merit-based recruitment, and oversight institutions insulated from extortion incentives. Banking, insurance, education, and even religious spaces must be regulated to protect citizens rather than powerful interests. Equally important is cultural change. Everyday scams must no longer be excused as survival tactics, and unexplained wealth must be questioned rather than admired. Equally important is a cultural reset. Development is built on trust, fairness and accountability rather than clever shortcuts or elaborate deception. Nigerians must make the choice about the way forward. It can remain a cartelised scam economy where everything has a price and nothing has value, or it can pursue reform where institutions work, effort is rewarded, and public office returns to service. The future will not be determined by how much money circulates, how many billionaires there are, the age at which people make their first billion, the grand titles and appellations that adorn politicians and public officials, the number of private jets in hangars at airports, the number of overhead bridges in state capitals, but by whether money is clean, productive, and honestly earned.
