As Nigeria has now firmly entered the grips of a recession, albeit the first recession in decades, it’s citizens are looking for new avenues of financial prosperity. Ironically, it is a decades-old Russian Ponzi scheme that is proving most popular to millions of people across the nation. The Mavrodi Mondial Moneybox or MMM scheme, is a Ponzi scheme with its roots in Russia, which promises unreasonably high returns on investments. Originally set up in the late 1980s by Sergei Mavrodi, a Russian ex-convict, the scheme is now taking hold in Nigeria where it has been operating for over a year.
According to the MMM Nigeria website it describes the scheme as a “mutual aid fund where ordinary people help each other.” Essentially, registered participants donate money to help other participants who request it and expect new participants to return the the favour at a later date. The scheme promises 30% monthly returns for participants who donate, and this in itself is proving to be a huge selling point. In other words, a participant who donates money is eligible to request the amount donated plus 30% interest after a month. That request is then fulfilled by a new participant to the scheme. The trouble with this whole program is that it simply is a Ponzi scheme, and therefore, only the early joiners get rich. Unfortunately the efforts of the latecomers end up being futile, and they lose all their money invested.
What is a Ponzi Scheme?
A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier investors. For both Ponzi schemes and pyramid schemes, eventually there isn’t enough money to go around, and the schemes unravel.
A great analogy for this is musical chairs. Once the music stops, and there are suddenly more people than chairs, people end up losing.