The rise (and rise) of money-tripling Pyramid Schemes in Nigeria: To join, or not to join??

Wednesday, November 30, 2016

I have a confession to make.

These days, I cannot eat, or sleep, or just sit down. A voice keeps calling me “Come! Come!!”

It is the voice of ‘MMM’.

If you live in Nigeria, or you are Nigerian, or you are married to a Nigerian (home or abroad), the chances are great that you would be aware that this is presently the singular most popular three-letter word in Nigeria.

‘MMM’ stands for the first three initials of the founders of a pyramid scheme, which scheme promises its contributors 30% return on their ‘investment' after a month. However, the investments do not constitute capital for some profit-making business. There is no BUSINESS; rather, the ‘business’ is the continued inflow of and recycling of contributions.

Bottom-line: Borrow from Peter’s contribution to repay Paul, with interest. Borrow from Steven to repay Peter, with interest. Borrow from Alice to repay to pay Steven, with interest. Borrow from Ola to repay Alice, with interest...   

And on, and on. (Or something like that)

So yes, this is a confession… that I am being tempted daily to jump in the band-wagon of ‘joyful’ contributors. You see, I was among the first set of people to predict its doom within a matter of weeks. Surprisingly, in the one year of its operations in Nigeria, the ‘MMM’ scheme has waxed strong.

What has not made sense to me - and to a whole lot of other people – is how the money is ‘doubled’, as there is no clear investment-yielding venture the contributions are used for. Rather, the monies merely change hands.

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How exactly does ‘MMM’ make its profit??

Answer: I do not know.

And the same answer goes for the other pyramid schemes, such as (Ultimate Circle, Foodrising, e.t.c.) which all seem to be lapping-up the Nigerian financial market. It is not crystal clear how or if this ‘profit’ will be sustained, hence, my skepticism.

I had prided my cynicism as being peculiar to and/or fueled by my profession. That is, until I met a fellow member of the profession, who extolled the virtues of the ‘MMM’ scheme with so much dexterity, that I wondered if he was in the wrong career choice.

(Lord! The guy can ‘yarn’ for United Nations and Olympics joined together)

He almost convinced me to take out my life-savings (trust me, it’s not that significant), and register immediately. But I still had my reservations not entirely assuaged.  Paramount of these was the question swirling in my head, that if financial profit was this easy to make, why had no one successfully come up with this earlier? How do I know this will last? What if one block of the pyramid is taken out, and everything comes crashing down, like a pack of dominoes?

I would love to think these questions are rational.

But Poverty is not rational. And by world standards, a majority of our over 180 million lot are poor; with a huge part of that majority dirt-poor. Quite unlike rationality, Poverty is not of the future. Poverty is about the NOW: the means to survive NOW. The food to eat NOW. The clothes to wear NOW. The extra N9,000 I get on my N30,000 contribution NOW; without consideration for “what if the N30,000 does come back?”

Beyond Poverty is the fearlessness which comes with a certain type of hardship. Inflation is at an all-time high. The Naira has undergone the worst kind of devaluation in its history. Most of the participants in the ‘MMM’ Scheme to whom I have broached the possibility of loss of their contributions would often respond along the lines of “If I keep my money in the Bank, it will lose value. Either way, I will lose the money. I might as well make some profit out of it”.

Over and above this resignation to fate, I am more disturbed that the people have been failed so much by Institutions, that we now turn to atypical, albeit high-risk ventures for some source of re-generation of meagre income.

In my mind, I have blamed the local Banks, who would kill new ventures with their inhuman interest rates and unfriendly loan practices. More than the Banks, the Government daily fails its people, in promoting the wealth of a chosen few, rather than a general and transparent distribution of our common wealth across board. Thus, people have resorted to their own version of self-help, to grow their resources, and ensure survival in this jungle economy.

Pyramid schemes have capitalized on Poverty and hardship, and appear to fill the gaps the Institutions have left open, by presenting some extra means of revenue generation. Whether such ‘filling’ is sustainable however is not certain, as this is a question best answered in the future.

Thus, the prevalent question in the present for a lot of Nigerians is whether or not to invest in quick-paying ‘profit’ making pyramid schemes. 

I would think this depends on each person’s personal ‘risk-metre’. MMM (for example) is not illegal. (At least, not yet, as there is nothing in the laws preventing their operations in Nigeria)

It is advisable however that before participating in any such schemes, some due diligence should be executed on the scheme (e.g. via simple internet searches), and an informed decision to invest be made, knowing that the risk of the bubble bursting is quite high, and balancing this risk against expected returns.

In the event that you do decide to invest in any of the pyramid schemes, and for some reason, are unable to recover such investments or the chosen scheme crashes, please, do not distribute your high blood pressure with anyone.

Just drink your Garri without groundnut. In silence.



P.s. My risk-metre is low. I will obtain (mental) ear-plugs to block the clarion call.

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  1. Through bitcoin is how they make their profits

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  3. Like Bami rightly stated. They make their money through bitcoin, MMM doesn't pay you in fractions so whatever fraction your pay out sums up to, they'd take it and convert it to bitcoin. e.g your investment have matured and you want to get it back, let's say it's 123,986 naira. MMM would allow you withdraw only 123,000. The remaining 986 naira is theirs which they'd get through bitcoin.

    One can even decide to invest a meagre 10,000 naira in it but with 10% referral bonus for every person you sign up, the person can be cashing out over 200k from the 10k investment in 30 days if he/she is able to sign people up with large investments.

    The greatest risk in life is to never take a risk. You can take the risk once, invest a million naira and cash out about 1.35 million after 30 days. Take your 1million away and reinvest your 350k, so even if it crashes you have nothing to lose.

    There's no business that's 100% guaranteed. You have to take risk one way or the other.