After meeting with the directors and authorised representatives of Mufhiwa Building Projects, the central bank has reiterated its stance that the business activities constitute a pyramid scheme and are therefore illegal in Namibia.
The Bank of Namibia (BoN) initially labelled Mufhiwa Building Projects as illegal in December last year and a follow up assessment this year came to the same conclusion.
According to a statement from Bank of Namibia spokesperson, Kazembire Zemburuka, a central bank assessment concluded that Mufhiwa Building Projects is illegal because its members and participants are encouraged to recruit new members, upon payment of a joining fee of N$200, with the promise that such members receive payments to have their home loans settled, or to purchase new houses, or to renovate their existing houses; Mufhiwa Building Projects does not generate an income through the sale of a product or any service, and the joining fee of N$200 is used to pay existing members and the directors or owners of the scheme.
“Therefore, as soon as the recruitment of new members stops all the members and participants in the scheme will not receive any payment and will lose their joining fee,” Zemburuka stated.
As a result of the Bank of Namibia’s decision, Mufhiwa Building Projects has been instructed to cease business operations in Namibia immediately and members of the public are instructed to stop participation in this scheme with immediate effect.
When BoN first informed the business of its illegality on 04 December 2020, the central bank appealed to directors or duly authorised representatives to make contact within a prescribed period from the date of issuance of the statement, in order for the bank to consider the matter in terms of the provisions of the relevant legislation.
“Accordingly, directors and duly authorised representatives contacted the bank and presented the business model of Mufhiwa Building Projects. Subsequently, the bank made an assessment in accordance with the provisions of the Act,” Zemburuka explained.
Now, BoN has again urged the public to make enquiries about businesses with similar characteristics or business activities before participating in such business activities.
“The bank remains committed to protecting consumers from fraudulent pyramid schemes as mandated by law,” Zemburuka concluded.