By Harriet Kabanyoro

Ponzi schemes follow a similar trend: they promise unusually high returns within a short time, referral bonuses and aggressive recruitment. The architects eventually disappear with everyone else's funds.

Many Ugandans have fallen for this play. In 2022, losses associated with a scheme aptly named BLQ Football were reported at about Shs60b. In 2023, the police reported that victims of another scheme, Capital Chickens, lost Shs5b after being promised returns of between 40 and 60%. Now, reports show more Ugandans have lost money in schemes such as Fidelity Forex Trading and Hut 8. The scale of the losses is yet to be determined.

This reveals a deeper economic problem. Ugandans are not necessarily unable to invest. The amounts lost in such schemes suggest that some households have investable funds and a strong demand for high-return opportunities. The difficulty lies in where to invest these savings. This is also reflected in Uganda's formal investment market. The Capital Markets Authority (CMA) reported that assets managed through collective investment schemes had reached approximately Shs6.02 trillion by March 2026.

The growth of regulated investments alongside the continued popularity of fraudulent schemes suggests that Uganda's challenge is not simply mobilising capital. It is about redirecting available household savings towards credible and productive investments.

At the household level, losses destroy accumulated wealth. Money that could have financed education, housing, businesses and productive assets disappears. Affected households borrow to recover their losses and sell productive assets.

Although the public is repeatedly warned against unlicensed schemes and encouraged to verify whether providers are authorised, fraudulent investment platforms continue to attract participants.

Over time, repeated losses may make households suspicious not only of fraudulent schemes but also of legitimate capital markets products, thereby discouraging savings mobilisation and financial market development.

If these schemes continue unchecked, Uganda risks losing more than household savings. Persistent losses can reduce resources available for domestic investment, weaken public confidence in financial institutions and discourage participation in legitimate capital markets.

At the household level, they can increase indebtedness and reduce consumption and investment. At the national level, untraceable cross-border transfers can complicate financial surveillance and increase the risk of domestic capital being channelled outside productive economic activity.

What do we do? Uganda should develop a single, highly visible investment verification platform through which the public can immediately establish whether an investment provider is licensed by the CMA, Bank of Uganda or another competent regulator. Banks, telecom companies, mobile money operators and the Financial Intelligence Authority should strengthen the identification and reporting of suspicious entities collecting funds from the public.

Furthermore, Uganda needs practical financial and investment literacy. The National Financial Inclusion Strategy II (2023–2028) already provides a framework for improving financial capability. This should be translated into targeted programmes in universities, workplaces, diaspora communities and digital platforms, teaching potential investors how to verify licences, assess risk and return, recognise recruitment-driven schemes and identify unrealistic investment promises.

Government and financial institutions should actively promote legitimate investment alternatives.

The objective should be to make legitimate investment opportunities as visible and accessible as possible.

The author, Harriet Kabanyoro, is a graduate intern at the Economic Policy Research Centre.