Is proof of funds a fraud?

The proof of funds loan is the most important financial product to have impacted almost 100,000 middle-class Nigerians over the last two years. It has been the foundation to enable most Nigerians that have achieved the “Nigerian dream” to japa. 

But could this be the biggest fraud of all time? 

What is proof of funds?

This is a signed official statement of a bank account that a student or an immigrant has the funds to settle or take care of themselves in a foreign country. Embassies have been demanding this for centuries, especially the UK, Canadian and Australian embassies. 

What’s the genesis?

Let’s understand that to say our economy is battered and the country itself is messed up is an understatement. It’s expected for anyone with a shred of sense to run for their lives. Maybe if I didn’t think staying in cold weather too long would kill me, I would be running too.

The hitch is with a bad economy; people don’t have the money to provide proof of funds. Let’s think about it; If they had thousands of pounds stashed away somewhere, they might not be so desperate to run off to a foreign land in search of milk and honey. 

This is where the smart lenders entered the game. 

How does it work?

Lenders saw an opportunity to provide those with migration plans with a profitable loan product. Tons of lenders do this. They give individuals the large loan needed to show proof of funds to the embassies.

You’re probably wondering what’s stopping Nigerians from simply taking this loan and using the money to japa, never to be seen again, the same way they treat other loans. Well, the bank account containing the loan is controlled by an internal bank friend collaborating with the lender. The account is locked, so the borrower has no access to the funds. The money only belongs to you on paper.

If you take out a loan like this, you pay monthly interest in the region of 3%. So proof of funds of £20,000 means ₦20 million (yeah, a pound is about ₦1,000) and ₦600 thousand per month for six months. Good luck to all who set out on this journey.

Is proof of fund fraud?

Now let’s do a quick English language class. What exactly is fraud? The answer: a false representation of facts. The embassy has requested confirmation that you have funds to support yourself when you make the big move to their country. But you borrowed money that you definitely don’t have to prove, deceiving the authorities. 

It’s a fraud. No two names.

Take it easy; I’m not here to judge. I, too, did this when a family member was going for a post-graduate program. I used my boss’ account as a guarantee of funds. Don’t quote me; I will deny you. 

What would probably happen? 

As everything is abused by Nigerians, this would probably unravel soon. The outcry has already begun. Nigerians have started arriving in these countries with only little to their name and may soon become destitute. Many have already found themselves in less-than-ideal conditions; some have been asked to withdraw from universities because they couldn’t pay the balance of their fees. Others are homeless and forced just to lay their heads anywhere they find. 

These countries will soon find out that these guys never had the money in the first place. 

Would they ban us as the UAE did? Maybe not. But they could start doing what CBN did to those who asked for licenses (that’s a story for another day) by forcing them to either open an account in a foreign country or pay school fees and accommodation costs 100% ahead of visa application.
Although things are undeniably tough in Nigeria and many of us understand and maybe even sympathize with the japa craze, the sad reality about cutting corners like this is that those coming behind you will probably have to pay for your sins too.