Why MMM, other ponzi schemes are thriving in Nigeria: research

Why MMM, other ponzi schemes are thriving in Nigeria: research

Wednesday, May 10, 2017 6:07 pm

The founder of the MMM financial pyramid scheme Sergey Mavrodi. AFP/Getty


Yudala, an e-commerce firm has said that ponzi schemes are thriving in the country due to depression.

In a statement signed by the Head, Corporate Communications, Yudala, Mr Gideon Ayogu in Lagos on Wednesday, the company said that the schemes were thriving in spite of their clear and present dangers.

Ayogu said that largely unheralded for a long time, ponzi schemes came to the consciousness of the entire nation in 2016.

“With the descent of the Nigerian economy into its first full depression in over two decades, many embraced the rise of these money-spinning schemes as a way out.

“With tough economic climate, Nigeria fell into its full recession in 29 years at the turn of last year.

“With job losses in various sectors and inflation rising to double digit figures, many distraught Nigerians were in desperate search of a lifeline.

“In came all manner of ponzi schemes promising incredulous returns on investments.

“At the height of its fame, Mavrodi Mundial Movement (MMM), one of the most popular, had over three million Nigerians on its subscriber list.

“Despite the crash of this and many others that came after it, many are still succumbing to the lure of ponzi schemes,” Yudala said.

He said that through Yudala’s Research/Development Unit, the Yudala x-rayed scheme and found out that its ”mouth watering and quick returns” made it remain popular in spite of risks involved.

The e-commerce firm said that in its hey-day, MMM offered Nigerians huge interests on their investment as much as 30 per cent within a period of 30 days.

According to the company, an investment of N100, 000 is bound to earn the investor about N130, 000 in addition to other bonuses that will reportedly accrue.

“Same template was followed by the tonnes of other ponzi schemes that followed; each looking to out-do the other in the terms offered.

“In the view of many, not even the banks or other financial institutions can match such returns,” it said.

Yudala said that another reason was the slick marketing by the operators of the various ponzi schemes.

He said that all the operators had one thing in common, which was the ability to present the benefits of the scheme in glowing terms.

Yudala said that many Nigerians had fallen for these slick marketing techniques at their own peril.

He said that another reason for ponzi popularity was the free and massive publicity it got from the Nigerian government.

Ayogu said that when it discovered the huge number of Nigerians being drawn into the risky net of ponzi schemes, the government and its regulatory agencies decided to sound a note of caution.

“Various public financial and anti-graft institutions, including the CBN and the Securities and Exchange Commission  repeatedly warned on investing in the schemes.

“The Nigerian Deposit Insurance Corporation and the Economic and Financial Crimes Commission repeatedly warned that the schemes are fraudulent and that those investing in them may lose their money.

“Commendable as the warnings were, it also inadvertently played into the hands of the operators of these schemes by making them more popular,” it said.

He said that the lucrative referral system also made ponzi schemes to thrive.

According to the company, there are promises of extraordinary returns through a system which relies on regularly recruiting loads of new subscribers or investors for it to remain afloat.

He said that as a result, attractive incentives were offered to ”Guiders” or those who succeeded in recruiting new investors.

He said that another reason why ponzi schemes thrive was the faceless and sophisticated nature of operations.

Ayogu said that the NDIC disclosed that an ‎estimated three million Nigerians lost N18billion when MMM suspended payment to investors last December.

“This has not deterred operators from floating other numerous investment schemes and ensnaring more gullible ”investors” in its unsustainable fold.

“Most Ponzi schemes are run by faceless individuals who boldly disclaim any forms of liabilities on their websites.

“Indeed, it is believed that most of these schemes are actually run by the same set of individuals out of choice locations such as Dubai and the United Arab Emirates.

“Most of these chaps are young and digitally-savvy individuals, for whom the absence of the risk of discovery and legal consequences means a chance to float more of these dubious investment schemes,” he said.

Join The Conversation

One Comment

  • Tom Nwafor says:

    Why don’t you people leave MMM alone? You have said that the economic depression being experienced in Nigeria has aided the rise and popularity of ponzi schemes in the country. What do you expect poor people to do where there is no job, no salary increase for those privileged to work despite high rising inflation which eats away every kobo paid to them, no job security for those who find work at all? You people should research into providing alternatives for the masses; or are you waiting for all of us to die when the government is deceiving themselves by unleashing untold hardship on the citizenry in the name of fighting corruption?

  • What do you think?

    This site uses Akismet to reduce spam. Learn how your comment data is processed.