A short history of MMM in Nigeria
Nigerians have not proven averse to Ponzi schemes since these ideas started floating around in the country even in their infant forms. Since many Nigerians became familiar with banks and banking operations there has always been that one outfit, strangely or conveniently titled, which announces that it can beat the meagre percentage offered by the more traditional banks. Why not put your money in that then?
The first Ponzi scheme to truly cause a storm in Nigeria was led in the early 90’s by the so-called Umana bank, named after its proprietor, a Dr. Umana Umana. But before Umana’s bank, there had been a handful other schemes of this nature in Lagos and some other areas of Nigeria. One of them was Planwell in Edo State, which promised and did deliver on huge returns before summarily winding down after investors reduced. None of these achieved as much reach and spread as Dr. Umana’s bank, which, to be clear, was not exactly a bank, as it had no licence to operate, nor was it a financial institution of any sort. Flooded by a large host of depositors who had been promised a hundred percent interest after 4 weeks of investment, his outfit ran a booming business in Port Harcourt until it was shut down by the military government of Babangida. While some reports claim the business didn’t shut down until the military intervention, others say the scheme was nearing its end before the intervention. All are however clear on the fact that the scheming doctor was running a Ponzi scheme and an illegal business.
In the months of 2006 into 2007, certain strange banks, some proposing multi-level businesses and all promising huge returns on investments, began to emerge. Carrying different names, they were collectively known to the authorities as wonderbanks. The biggest of them, Nospecto Oil & Gas, supposedly into oil & gas business, promised almost 106% yearly interest on a fixed deposit of 450,000naira and enjoyed incredible patronage. Sooner, it could no longer keep up with paying interests, causing not a few hearts to quake. Many later filed claims against it. According to Nigeria’s Central Bank release in 2010, a total of 560,882 claims were submitted by the public against 440 wonderbanks totaling up to 106.9 billion naira. Of these, Nospecto accounted for 48 percent. Nospecto and the several other wonderbanks were shut down and charged to court by the Nigerian government in the years that followed.
These wonderbanks and the many Ponzi and pseudo-Ponzi institutions which had traded in Nigeria so far had at least a physical office where aggrieved depositors could go, charge at owners and register their displeasure once the first cracks in the wall began to appear. They also could hope on government intervention since these so-called banks were resident in the country. This was until the age of widespread use of the internet which brought with it increased anonymity and immense separation between blogger and reader. By 2015, an estimated 90 million Nigerians were using the internet every month. The stage seemed ripe for the introduction of an internet-based financial proposal promising huge returns on little investment. Sooner than later a handful began appearing in the early months of 2015. Without doubt MMM led the way among them.
MMM, short for Mavrodi Mondial Movement, began operations in Nigeria sometime in 2015. Before then, it had opened shops in India, South Africa, Zimbabwe and a host of other countries. The MMM-Nigeria business strategy was a rather simple one: have a participant pay an initial deposit, not to a central account, but directly to another member, and promise to pay 30% interest on any such deposit after a month of growth. It worked like magic and MMM enjoyed intense patronage from Nigerians. Never minding that MMM’s russian inventor, Sergey Mavrodi, had been indicted in Russia for fraud, that MMM had gone under in South Africa only to remerge with many initial depositors losing their money and that MMM Zimbabwe was also suffering credibility issues, Nigerians poured in money into the scheme. The lure of a 30% interest on any amount of investment was simply too attractive to ignore. With only an online office where users logged in and indicated interest to “provide help” and “get help”, MMM leveraged on the power of the internet to connect millions of gullible participants. By November 2016, business in Nigeria was flourishing and many deepening their faith in the system as they duly obtained, in addition to their primary deposit, 30% get help returns.
This didn’t go without warnings from different quarters, most circulating on the internet, MMM’s home. The country’s CBN, House of Reps and some other financial and political institutions issued a number of notices to Nigerians urging them to not engage in what they called a Ponzi scheme. No one seemed to take heed. In fact, they were merely advised to swallow back their advice. On the one hand, Nigerians were battling a recession unforeseen by the same political and financial establishments which are now wise with words, and on the other they had grown to not trust these stakeholders who themselves are probably corrupt and have looted the country to death. MMM, a seeming charity, offered a way out, an almost survival path.
All seemed fine until MMM suddenly declared on the morning of 13 December 2016 via its website that it was freezing all deposits until the next year. This unanticipated, shocking news caught many participants off guard. A flurry of anxious posts followed on social media and on several blogs pressing questions to whoever and to so-called Guiders about the situation of things. However, answers remained insufficient. If anyone thought this pyramid would crash all so suddenly (and quite a number did understand they were investing in a Ponzi scheme), not a lot expected it so soon. Hope was maintained in MMM’s appeal that this was only a temporary halt designed to remove the scheme from an anticipated overload from Christmas and New Year requests. Perhaps the government might have intervened as it did with all other Ponzi schemes which ran in the preceding years in Nigeria, but there was no office and no proprietor.
On 13 January 2017, MMM announced a comeback a day ahead of schedule, immediately rekindling confidence in its promises. But the spark it engendered lasted no more than a week, as it gradually turned out that there were now more people to pay off than there was money trickling in. Besides a host of alternatives had emerged, including home-grown ones, and MMM no longer enjoyed the majority it once boasted of. Slowly, many started realizing their loss.
It is extremely difficult to put a number to the loss Nigerians incurred on MMM. No numbers have emerged since MMM’s return. Nonetheless, what is in no doubt is the penetrating reach of the MMM franchise into many corners of the country. Reports emerged that there were participants as far as remote villages in the most distant states in Nigeria. No doubt, millions lost money. A calm estimate, weighed in relation to the reach of Nospecto or Umana’s bank, could put losses in the hundreds of millions of naira; a more reasonable estimate could comfortably stretch this into billions.
Since its return MMM has been clutching at straws to survive. In February, it announced a freeze of certain entitlements for its leaders, dancing to popular tune to cut back on undeserving bonuses. In its place are now many more Ponzi brands, operating across the spectrum of social media from Whatsapp to Facebook, all promising incredible returns; some up to 200%. Ultimatecycler, iCharity, Naija ATM, e-Cooperative, GetHelpWorldwide, NNN, Naracle are some of the major ones, many nudged on in the convenience of social media. Yet, indications emerge Nigerians are still active participants in their schemes. The stage seems set for a collapse worse than the country ever saw with Umana and Nospecto and probably with MMM. There is clearly no helping this.
Timeline of MMM-related news in Nigeria
|Sometime in 2015||MMM begins operations in Nigeria by opening its mmm-nigeria website and encouraging participation from Nigerians.|
|9 November 2016||Reports emerge that the Nigeria’s House of Representatives have ordered an investigation into the activities of Mavrodi Mondial Moneybox (MMM) scheme in Nigeria. According to the Speaker, House of Representatives, Hon. Yakubu Dogara a committee on Banking, Currency, and Financial Crimes will investigate the Ponzi scheme.|
|10 November 2016||Newspapers report that Nigerians have condemned the directive of the House of Reps to EFCC, security agencies and the CBN to take urgent steps to halt MMM activities in Nigeria before many Nigerians become victims of the scam.|
|11 November 2016||MMM Nigeria’s website becomes the fifth most visited site in Nigeria according to Alexa. Facebook ranked sixth|
|17 November 2016||A lot of Nigerians report making fortunes as participants in the MMM scheme. Participation cuts across Nigerians of varying ages, different religious affiliations and different tribes.|
|2 December 2016||Bloggers who went on the trail of the owner of the MMM Nigeria website unearth a certain Pastor Ernest Mbanefo as the owner of the MMM Nigeria scheme. No sooner is this revealed than the news permeate every nook of social media. Days later, the said pastor comes out to deny the charges and claimed he was only a registered member.|
|9 December 2016||The number of registered users on MMM might have increased in the interval from October into December 2016, as traffic on its primary website increased steadily.|
|13 December 2016||MMM freezes operations, stopping the growth of all returns and offering as excuse an expected overload into the New Year. Many, however, felt the scheme was already revealing early cracks. MMM promised to resume operations on 14 January 2017.|
|16 December 2016||Chuddy Ugorji, often referred to as the number one MMM guider in Nigeria and from whom many were expecting a reaction after the MMM freeze days earlier, finally reacted on social media, claiming no prior knowledge of the freeze and advising fellow “Mavrodians” to not panic as “everything will be back to normal in no time”|
|25 December 2016||Some MMM members conduct an extensive Christmas celebration, still retaining hope in the vacationing scheme.|
|13 January 2017||MMM announced its return a day ahead of schedule having frozen returns into the New Year since 13 December 2016. The news sent a lot of hopeful participants into mass euphoria|
|26 January 2017||Several blogs report that the initiator of the MM scheme in Nigeria, Chuddy Ugorji, has fled the country with his wife, Amaka. A YouTube video dated 22 December 2015 had the same Chuddy introducing MMM to a handful listeners in a presentation.|
|1 February 2017||A lot of news items began circulating on blgos and news channels regarding suicides, jailing and death of MMM participants and investors. Most of these news items are hard to substantiate.|
|21 February 2017||Bloggers and some news media report the subsequent death of a man who had invested in MMM and attempted suicide several weeks earlier after learning of the freeze on interests acquired in the scheme|
|22 February 2017||MMM introduces new rules regarding bonuses for its so-called Guiders|