Pyramid scheme in Egypt threw many thousands of families in turmoil

Sent On: 
Mon, 2021-03-29
Newsletter Number: 

Villagers in and around the village of Qufada [Qufāda], around 200 km south of Cairo, are devastated. Muslims and Christians lost billions of Egyptian pounds because a local trader started a pyramid scheme through which thousands of people became involved and lost their savings and much of their possessions. Qufāda is a village with a large percentage of poor people and a high percentage of migration. The story shows a basic human weakness: greed, the desire to become quickly rich with little to no effort. Qufāda is a village our Center from Arab-West Understanding has good ties with. We adopted this village, have visited the village with our students and have several reports about Qufāda in our database.

Qufada village, photo by Jayson Casper

The scheme started in 2018 with a trader in the village of Qufāda and gradually included most of the 13.000 Muslim families and 280 Christian families in this village. After most villagers had become involved it expanded to surrounding villages with an interest paid of 16% per month. Of course, this could not be maintained. The maximum interest one can obtain from an Egyptian private bank is 14% per year.


It is surprising that this scheme could gradually develop in a period of two years. That this lingered on for so long only means that the number of people involved continued to grow until December 2020 when the trader was no longer able to provide people their 16% interest per month (192% per year). The Egyptian police arrested the trader and his accomplices, Muslims and Christians, in January. Egyptian media started reporting about this.


Pyramid scheme traders make their profits from signing up new recruits who in turn also sign-up new recruits with the promise that they too will profit until the number of people involved is so large that it is no longer sustainable and the people at the end of the line, when the scheme collapses, become the big losers.


What happened in Qufāda bears similarities to pyramid schemes in 2008 in Colombia. “Thousands of victims had invested their money in pyramids that promised them extraordinary interest rates. The lack of regulation laws allowed those pyramids to grow excessively during several years. Finally, after the riots, the Colombian government was forced to declare the country in a state of economic emergency to seize and stop those schemes. Several of the pyramid's managers were arrested, and are being prosecuted for the crime of "illegal massive money reception." ( and


The pyramid scheme in Qufāda also resembles an earlier pyramid scheme in 1999 in Egypt that in particular hit many churches in Egypt.


The problem is in local leaders who get involved in advocating such a scheme. Since Egypt is such a religious country these local leaders are often religious leaders. That does not necessarily mean malintent but if the intent was not evil it was stupid and irresponsible because once trusted local leaders advocate such a scheme many local people, trusting their leaders, become the victim. Many local people are not well educated. They have not seen such a devilish scheme before. It is local leaders who should realize that an interest of 192% per year is too good to be true and thus anyone should stay far from this. But in the first months and year it all seemed so good with money flowing from ‘heaven.’ One of the religious leaders, Shaykh Muhammad Abdallah [Muḥammad ʿAbd Allāh], suddenly made so much money that he no longer knew how to spend this. He spent nine million EGP (close to half a million Euro) on marrying an Egyptian artist and made a donation of 15 million EGP (around 830.000 Euro) to al-Ahly Soccer Club in Cairo. This lavishly spending of money temporarily enhanced his status in the local community. After the collapse he was arrested.


The pyramid scheme has done tremendous damage to mutual local relations. People who have lost their money, savings and possessions, blame the people who convinced them to participate and they in turn blame the people who got them involved, etc. until the top of the pyramid, the trader who started this.


Pyramid schemes are forbidden in Egypt but how much action do authorities take to stop such schemes in their bud? I do not know. For certain, however, is that many thousands of families have lost their savings and possessions. The anger in and around Qufāda is large. The Egyptian police sent in the first days of February four groups of six lorries to Qufāda with in each lorry 50 policemen to prevent escalation. The case is as of today still unresolved, and the police told the victims to go to the Public Funds Investigations authority. This will take months, if not years, before everything has been sorted out. This does not mean that people will get the money they have lost back.


For details about this local disaster please click here.



March 29, 2021


Cornelis Hulsman, Editor-in-Chief