Unmasking fraud in financial markets: a qualitative analysis of deceptive investment schemes in Tanzania

Purpose This paper aims to present an overview of deceptive investment schemes in Tanzania, highlighting notable incidents of such fraudulent schemes. It also describes drivers of those schemes and their effects on participants, the country’s financial markets and sector and Tanzanian society. Design/methodology/approach This paper draws on qualitative research conducted in Dar Es Salaam, Tanzania, using a case study design to investigate deceptive investment schemes that were either closed down by the authorities or the schemes ceased to operate. This study examines the schemes from both legal and extra-legal perspectives. Data collection involved interviews, questionnaires and the examination of government reports, legislation, court judgements, notices issued by regulators and media reports. Findings This paper shows that in the past few decades, Tanzania has experienced incidents of deceptive investment schemes, driven or enabled by a combination of legal and non-law factors. These fraudulent schemes have had adverse effects on participants, the country’s financial market and sector and the broader Tanzanian economy and society. Practical implications This paper highlights the need for further research to identify other underlying causes and enabling factors of these dubious investment schemes in Tanzania, facilitating the adoption of comprehensive policy interventions. Recommended policy actions made in this paper include strengthening regulatory frameworks, enhancing public awareness to inform participants of potential risks of investment-related fraud and establishing effective mechanisms for protecting victims of deceptive investment schemes. Originality/value The paper contributes to the literature on fraudulent investment schemes in Tanzania by examining their operations, drivers and effects. It underscores the need for the adoption of comprehensive, multifaceted intervention strategies to effectively tackle investment-related scams in Tanzania.