With the recession in full swing in Nigeria more Nigerians seem desperate to find solutions to the pinch in their pockets. So much so that the voice of reason has been drowned by the din created by the latest rave to hit the Nigerian scene – MMM Nigeria. MMM is a ‘social financial network’ founded in 1989 by three Russians, with Sergei Mavrodi at the forefront. The network promises returns of 30 per cent to investors who ‘help’ members of the network by parting with some level of funds. While this sounds very attractive (I mean, no bank is paying up to 30 per cent interest, is there?) I have an arsenal of reasons why you should avoid MMM like the Black Plague. So allow me load my metaphorical revolver:

Bullet 1: Fraudulent founder

The founder of MMM, Sergei Mavrodi is also a Russian criminal. After declaring MMM bankrupt in 1997 he went into hiding. His arrest came in 2003 (Source: Wikipedia).

Bullet 2: Illogical source of returns

The source of the 30 per cent return promised to investors is entirely dependent on new or existing members contributing to the pyramid. In contrast, banks receive customers’ deposits and lend to screened borrowers who pay back usually in instalments with interest. In MMM, you do not get the promised return once funds coming into the scheme is less than investors’ funds.

Bullet 3: Legality of business

MMM is not a legally registered business. MMM Nigeria is not licensed by any Nigerian authorities. The Securities and Exchange Commission, Nigeria (SEC) has not registered MMM’s operations (Source: SEC Nigeria).

Bullet 4: Warnings on website

On the official MMM Nigeria website in the ‘About us’ page, you will have to study the instructions carefully before joining. In other words, are you prepared to part with say $100 and send same to a complete stranger without any written agreement?

Bullet 5: Trend of collapse in other countries

This perhaps is the most important bullet (point). ‘MMM-2011’, one of the series of MMM schemes, launched in January 2011 and later ceased operation in May 2012. Below is the trend in the last 19 years:

• MMM launched in Russia Feb 1994 and crashed in Jul 1994
• It started operations in South Africa in 2015 and had accounts frozen in 2016
• The Chinese government banned the scheme in 2016
• MMM launched in Zimbabwe early 2016 and froze in Sep 2016
• The MMM train arrived in Nigeria in 2016 and already rumoured to activate a ‘pause mode’ in December

Bullet 6: After MMM Nigeria crashes

For the observant readers you may have noticed that I began the title of this article with ‘5 reasons…’. This was not a typo as you may be wondering the purpose of the sixth bullet (point). Well, if you decide to invest your millions into this Ponzi scheme and it eventually crashes I think the purpose of the bullet will become a whole lot clearer.

In conclusion, many Nigerians have ignored the warnings altogether and are currently enjoying returns even they themselves cannot explain. MMM Nigeria is a ticking time bomb. When it explodes it’ll affect mostly everyone at the bottom of the pyramid.This Ponzi scheme in my opinion is fraud in the guise of helping others. For argument sake, let’s say there are only 31 people in Nigeria. 1 MMM member lends to 5 other members. Those 5 members lend to their respective 5 members (i.e. 25 members). The first 5 MMM members pay interest to the topmost member. The 25 MMM members pay interest to the first 5 MMM members. Who pays interest or even the principal of the 25 members? What if the topmost member and the first 5 members decide to leave the MMM network?