THE BRIGHT SIDE OF MAVRODI MONDIAL MONEY BOX (МММ) SCHEME

Nigeria's  Economic and Financial Crimes Commission has confirmed that they are monitoring the scheme. On the 13th of December, it announced the freezing of allmembers' accounts due to systems overload and the negative attention brought on by the Government andmass media, leading to wide spread panic in the Nation and even attempted suicides.

Mavrodi Mondial Money box (МММ) as Joint Stock Company was a Russian company that perpetratedone of the world's largest Ponzi schemes of all time, in the 1990s. The scheme was shut down by Russianpolice in 1994, because people, estimated from 5 to 40 million lost up to $10 billion due to scheme. And itwas   declared   bankruptcy   in   1997.

In   2011,   MMM   re-opened   as   "MMM   Global"   with   up   to   110subsidiaries per country, it became widely popular in various African countries like South Africa, Nigeriaand Zimbabwe. In 2015 MMM began operating in South Africa with the same business model, claiming a “30% permonth” return through a “social financial network”. The group was identified as a possible pyramidscheme by the National Consumer Commission and accounts of clients were later frozen by CapitecBank. In response to mounting criticism and official investigations by state authorities in 2016 supporters of the South African MMM scheme staged a protest march in Johannesburg and has started up again late November 2016.

On   July   2015,MMM   East   Africa,   launched   subsidiary   “MMM   Global   Zimbabwe” targeting the Zimbabwe population. MMM offered its participants “30% per month” return on all investments. It soonbecame widely popular in Urban areas of Zimbabwe, The Reserve Bank of Zimbabwe warned its citizensto stay clear of the program as it could be a fraudulent scheme. On September 2016, MMM GlobalZimbabwe issued a freeze on all accounts, speculations suggest that this occurred due to a fall in numberof participants.

On 5 September 2016, all MMM accounts were unfrozen, and members were encouragedby MMM to continue “investing” their money, however the MMM unfreeze came with a catch; Memberswould get an 80% loss of their available funds should they decide to withdraw their funds. This madesome participants let their funds remain in the program while others withdrew their funds to suffer an80% loss of  their  money "invested". This affected 66,000  Zimbabweans and caused  some economicinstability.

In November 2015,MMM launched a website targeting the Nigerian audience, also claiming a "30% permonth” return including other acquirable bonuses. The entity was self-described as a “mutual aid fundwhere ordinary people help each other.” And 2.4 million people had signed up by late 2016, with thecountry’s unemployed as primary  targets.

Nigeria's  Economic and Financial Crimes Commission has confirmed that they are monitoring the scheme. On the 13th of December, it announced the freezing of allmembers' accounts due to systems overload and the negative attention brought on by the Government andmass media, leading to wide spread panic in the Nation and even attempted suicides.

At this junction, Nigerians who are mostly participants of the scheme (MMM) has been asking serious questions such as will the scheme continue again in January 2017 as stated by the promoters of MMM. Is MMM what we actually need now in this Nigerian’s economic recession? Will Nigerians still benefit from it if the scheme continues in January 2017? Who will looses or gain money if the scheme turns outto unfreeze or freeze participant’s account.

In Nigeria, widespread and severe poverty is a reality. It is a reality that depicts a lack of food, clothes,education and other basic amenities. Severely poor people lack the most basic necessities of life to adegree that it can be wondered how they manage to survive.

The nature of Nigerian poverty is quite complex. The statistics shows no changes for the better, as the richones get richer, while the poor ones get poorer. Thus, it seems there is no poverty alleviation in Nigeria.According to the World Resources Institute’s environmental resource, about 71 percent of Nigerians liveon less than $1 a day and about 92 percent live on less than $2 a day. The most widespread causes ofPoverty in Nigeria include:

Unemployment: It’s a key factor. The living costs row higher while the standards of life go down. Theremay be various causes of unemployment in Nigeria. The most common one is the lack of education.However, even educated people often cannot find a job. The unemployment rate for the country hasreached 4.9% in 2007 and in 2015 it totals 7.5%.

Corruption: The term denotes an abuse of the power for private purposes. And it happens very often in Nigeria. Thus, the political system has been destabilized. The country income, which is taken mostly fromnatural resource revenues, is then distributed among the political office holders and their families. All therest are left in poverty. It’s a common case, when political leaders just ignore the necessities and well-being of those, who have voted for them.

Absence of the economy diversification: The country’s economy used to be based on the agriculturalsector. However, the oil sector rose to 97% by 1984. Since that time, it’s become the major one (it hasnever fallen below 90%). Any other income sources have been ignored by the authorities, which has made Nigeria very dependable on oil export. Thus, great amount of people has got impoverished, as  theirproducts have become irrelevant. Moreover, Nigeria’s oil revenues reduced after the world’s oil pricecrash in 2014. It also made the external debt increased.

Inequality: The income’s inequality among people from rural and urban areas is high in Nigeria. Thosewho live in the rural areas have their money only from agriculture, which isn’t a thriving sector today.Besides, they cannot invest their money as many people from the cities do.

Education System: Education is necessary for development. Many of the poor ones are uneducated. ManyNigerian girls can’t get educated as they are considered inferior gender.

Under-utilization of labor resources: Plenty of poor farmers aren’t capable of farming on a scale that willmatch their labor resources. Besides, there is dire shortage of working capital. It limits the productivenessof farming in general.

Political instability: Social and political programs are not capable of fighting domestic and international unrest. Investments are being withdrawn, jobs are insecure, the citizens feel economic precipice.

Is MMM   what   we   actually  need now in   this   Nigerian’s   economic   recession?   Nigeria  is  currently experiencing serious economic  recession, with massive job losses from left  to   right. The  country  is experiencing hyper inflation; where inflation and unemployment are increasing simultaneously. The pricesof goods are intimidating, yet there is no money to make purchases.

Companies large, medium, and small are folding leading to job losses in banking and in related industry.The ability of the economy to absorb the mass unemployed graduate is challenged by the, low or noindustry, low skills levels amongst the unemployed, which creates a perfect storm in an economy with askill deficiency in critical sectors. The government has made some good and hazardous economic policiesin  their   quest  to  solve  majority of the   problem faced  in  Nigeria.  The causes  of the   current Nigeria predicament have been attributed to many factors.

Nigeria economies are very bad. The impact of MMM on Nigeria economy is that more funds will be acquired and channeled into productive business thereby making scheme to be a vital resource of capitalfor small and medium scale enterprise. MMM Nigeria can only collapse when people loss confidence onit and people stop joining the scheme.

Will Nigerians still benefit from it if the scheme continues in January 2017? Recent finding reveals thatover  40%   of   NYSC   serving   corps   member   have  joined   the   scheme as  at   November   2015.   50%   ofunemployed graduates who have heard of MMM have also joined the scheme.

The scheme simply bringspeople of same like mind to help each other in solving their financial needs. So once you register in theplatform, you will indicate how much help you can provide to others in financial terms. You will then be matched with another community member who needs help and have provided help before within two tothree weeks. You will be given the person details to pay in the amount you promised to help, afterproviding the  help  you  will   then   be eligible  to  receive help  usually  after 14  working   days. Having provided help to others, you can request for help of 130% of your initial deposit with extra allowance thatyou will gain from it. For instance, if you provide help of 100k, you eligible to receive help of 130k plus $20,  $50, and $100 depending   on   the  amount  you   provide.  MMM   is   not  a   bank;   the   scheme  is   acommunity of people dashing each other money without conditions and no interest charges.

Who will looses or gain money if the scheme turns out to unfreeze or freeze participant’s account? Whatmost people do not understand is that when you deposit your money in the bank, they immediately useyour money in one or more of the following ways: such as allow another depositor to withdraw when theyrequest to do so, give out loans to those seeking loans from the bank, pay workers’ salary including bankmanagers, clerks, marketers, cashiers, tellers, cleaners, security guards, buying of equipment needed forsmooth operations like generator, computer systems, communication gadgets and so on. And sponsorother running costs of the bank.

For the privilege of using our deposits in the above ways, the bank rewards us with 1% or 2% interest (upto 6% if fixed deposit) provided the money stays with them for over a month. For instance, you deposit 100k with your bank and after 2 weeks you return to withdraw the entire 100k. Question is do you think itis your actual 100k they gave you? NO. Your actual deposit has already been used in one or more of the ways mentioned above and the 100k they give you is because of fresh deposits the bank recently received.If you look closely, you will realize that banks can pay more interest than they give, but that meanssacrificing the expensive and running cost of the bank.

However, in MMM the only thing your money is used for is paying another participant due for paymentdirectly, no middleman. There are no salaries to pay, no running costs, nobody collecting loans, no bank executive’s expensive lifestyle to support. So you can see that MMM can conveniently offer 30% rewardsfor your willing and generous donations to fellow participants. Therefore, whether 2% or 30% interest itall comes from the same source: other people’s money.

Conclusion

MMM has proven to be a variable source of income to the poor and average earners in Nigeria as atDecember 2016. The government should look at the bright side of the scheme, instead of planning to banit for their selfish goals. MMM came into the country at when the economic situation in the country israpidly going from bad to worse. Minimum wage is N18,000, fuel price is N145 per litre and the prices ofgoods are going up on a daily basis. Despite criticisms, Nigerians are still putting their hope on thescheme. Nigerians would gladly jump at anything that has the potential to provide an extra source ofincome. Until the entire scheme fizzles away, Nigerians will not give up on MMM. The governmentshould encourage and collaborate with the promoters of the scheme to make it more benefiting for the Nation.