Why Ponzi Schemes Thrive In Nigeria Despite N18bn Loss To MMM

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Why Ponzi Schemes Thrive In Nigeria Despite N18bn Loss To MMM

Why Ponzi Schemes Thrive In Nigeria Despite N18bn Loss To MMM – Simon Echewofun

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About 109 Ponzi schemes and crypto-currency sites are still trending in the Nigerian cyber sphere despite the crash of the popular Mavrodi Mundial Moneybox (MMM), which caused the loss of an acclaimed N18 billion in December 2016.

This article was written by Simon Echewofun and was first published on Daily Trust. The views and opinions expressed here are those of the author and do not necessarily reflect the official policy or position of 360Nobs.com.

In March 2017, the Nigeria Deposit Insurance Commission (NDIC) said Nigerians lost N18 billion to the MMM in 2016. The managing director of the commission, Mr Umaru Ibrahim, who spoke at the 38th Kaduna International Trade Fair, said the MMM had over  three million participants before the organisers suspended payment to investors because its system “experienced heavy workload.”

However, Daily Trust on Sunday observed that most MMM participants who suffered the disappointment turned to other schemes to reclaim their funds.

Again! FG Warns Nigerians Against MMM, Bitcoin, Other Ponzi Schemes

Ponzi schemes have been explained by experts to be an unsustainable financial system, whereby old investors are paid with proceeds of investments from new ones. The scheme survives only when it gets new investors; the dearth of such marks its end, leaving the most recent investors with huge losses.

The financial pyramid system became popular in Nigeria from September 2016 after the Federal Government officially announced economic recession.

Many participants said they entered into such schemes as an alternative means of survival. Popular among them were the MMM, Ultimate Cycler, Swiss Gold, iCharity and Get Help Worldwide (GHW).

By January 2017, the schemes had added a new twist – the crypto-currency, another name for virtual currency. While ‘bit coin’ has existed for long in the United States and other countries as internet currency for virtual trade and casino gaming, the angle of using it for the Ponzi scheme became popular in Nigeria from late 2016.

The digital currency being created by many Ponzi sites does not have any value outside the group; hence it becomes useless when many people tend to withdraw from such site, our reporter observed.

Below are some of the popular sites and the headaches of participants.

MMM Nigeria:  It is said to have been founded by a Russian, Sergei Mavrodi. It became popular in Nigeria by July 2016 and collapsed in December 2016, after it suspended payment to the accounts of acclaimed  three million participants. It was restarted in January 2017, but with most of the old participants’ fund still hanging. Some participants believe the site is still paying.

Lawrence Ekhator said he paid someone N20,000 on February 10, 2017 and got back N149,000 12 days after, including bonuses. “This is an indication that MMM

Nigeria is working and has been doing their best to get the system back in full blast. I am very happy and proud of it,” Ekhator noted.

Aniri Ebere Sylvanus is not happy with MMM. She said: “Deceivers! Pay me my old Mavro to show that you are making life better!”

Others confirmed that the MMM is paying a little part of their lost fund of 2016. One of them, Paschal Maduemesi, said on a Facebook page, “MMM paid a little part of my 2016 money and four of my downlines.”

Get Help Worldwide: This platform became popular in Nigeria on October 2016. The founders, on their site, said they examined the flaws of the MMM and corrected them. Those who participated said it worked perfectly until February 2017 when people began defaulting in payment. The problem was said to have worsened in March, prompting the site to move members to a new site known as Get Help Worldwide Exclusive.

Speaking on the status of the scheme, a participant, Hammed Olaide Salam, called for help from administrators over a displeasing rule. He said they were being compelled to pay others (Provide Help), even when they had not been paid

“What do we do? There is no money to Provide Help again and they said our account would be blocked if we fail to do it,” Salam said.

Abdul John, who has been in the scheme for four months, said one should never expect to get back 100 per cent of the fund invested. “People often default in payment; and others could upload a fake payment receipt, which hooks your money for a very long time while the site authenticates it,” he said.

Olugbade Olugbenga, another participant, was visibly angry on his Facebook page as he demanded for his money. “GHW, bring back my money,” he wrote.

Twinkas: It was founded in December 2016 for Nigerians, with a claim that it was based in the United Arab Emirates (UAE). Some participants said the site was crashing heavily as many investors were yet to be paid since February 2017. Many of the participants, however, said Twinkas was better than all others in the first two months it started.  It is 100 per cent of whatever one invests, with options of up to N200,000 investment.

Many participants are not happy with the scheme. When Twinkas apologised for the slow payment this week on its Facebook page, it was greeted with discontent.

Osayande Rawlings Onuwa said it wasn’t working.

“Guys are not smiling oh,” responded a participant identified as Obende Topaz Fortune.

But a few others think the scheme is doing well. One of such is Nazzy Goodness Michael. “Twinkas rocks!” he exclaimed.

“Long live Twinkas,” another participant, Akintade Ayodele responded.

OneCoin, a crypto-currency site: OneCoin became popular in January 2017, with seminars organised in some Abuja hotels. Some members told our reporter that they were having difficulties to get paid as many accounts are being frozen. However, to attract more participants, the site does a N1,000 airtime contest daily. On its site, the scheme stated, “From 2015 to 2017, our two-year track record has proven how safe and successful OneCoin is.”

Murtala Garba, one of the participants of the scheme, said he was expecting his proceeds after he invested and hoped to do business with his money.

Ekalo SB Attahson said: “I will invest in a small or medium business, earn more profit and become a supporter to OneCoin when it is successful.”

Another ambitious participant, Blessing Ebere said, “I will use part of the money to invest back by upgrading to a higher package, use part of the remaining money to buy a plot of land and the remaining to start up a business.”

It was, however, gathered that most of the participants are yet to get any real proceed from OneCoin as they were promised a six-month maturity period, probably starting from June this year.

As at April 2017, the new and active schemes include Fast Recycler, Esusu, Giverscorner and Naira Donation.

It was reported that the Securities and Exchange Commission (SEC) had closed two of such wonder banks. Marian Moses, founded by Moses Samanja and Tine God Networks, with an unknown founder were affected.

An economist and financial analyst, Mr. Ogbuja Ogbu, told our reporter in Abuja that an average of two Ponzi sites opened in Nigeria on a weekly basis. He said they were thriving because of the vulnerable nature of Nigerians.

“Many participants of the MMM scheme were disappointed, yet other sites are being patronised. Some of the sites even said they had learnt from the flaws of the MMM and made their sites more sustainable.

“A Ponzi scheme can never be sustained. The only albatross it needs to crash is managing the influx of crowd on such sites. But by then they would have made huge sums of money for themselves,” Ogbu explained.

As Nigerians still flood these unreliable schemes, the NDIC has repeatedly warned of its inherent dangers.

Speaking at the 28th Enugu International Trade Fair last week, the NDIC boss, Umaru, warned participants against patronising the various Ponzi platforms and other forms of trending digital currencies. He noted that the platforms were neither authorised by the Central Bank of Nigeria (CBN) nor insured.

Umaru, who was represented by the Enugu zonal controller of the commission, Nicholas Ayuba, said the NDIC had commissioned a study on the virtual and digital currencies to help protect consumers, educate them financially and secure the nation’s economic development.

Photo credit: Daily Trust

This article was written by Simon Echewofun and was first published on Daily Trust. The views and opinions expressed here are those of the author and do not necessarily reflect the official policy or position of 360Nobs.com.

Datboyjerry

Datboyjerry

I am but your herald boy in the art of the pen.. An eccentric Environmental Biologist smouldered in the glorious epiphany of online journalism. If you ever find my article unduly insipid, sue me and i’ll refund you...

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