The Guardian
Email YouTube Facebook Instagram Twitter WhatsApp

A new generation, a new fiddle


MMMAbout six months ago, I was engaged in a discussion with a childhood friend who occasionally asks me for investment advice. After discussing my view on the near-term outlook of the exchange rate, he cunningly asked for my opinion on an investment scheme currently making the rounds. “By the way” he said, “have you heard about MMM”? I responded that I had not and that the name did not sound like that of a credible organisation. Certainly, I would not name any business of mine MMM, but then that is me. He chuckled and urged me to look up the investment scheme and give my thoughts as soon as possible. When he spoke about MMM, the enthusiasm in his voice was infectious; as he walked away, he had a spring in his steps and was smiling to himself like someone who had discovered a hidden gem.

I went online to read about MMM and came across a plethora of materials and discussions. Many people had invested in the scheme and many more people were investing or considering investing in the scheme. As I continued reading, I identified several fundamental flaws in the investment scheme and it made me wonder why the scheme had caught on as much as it did. Afterwards, I called my friend to discuss my findings and tried to convince him not to invest in the scheme because I believed there was no business case to sustain the model.

For those who do not know about MMM (highly unlikely that you have not heard about it except you live under a rock where the gospel of MMM is yet to reach),permit me to provide a brief background. MMM is an online platform that thrives on the logic of giving and receiving help. It allows a user render help to people (similar to giving a loan) with the promise of repaying the principal plus a 30% interest in a month. Whilst the platform has a few other intricacies, the idea is basically about giving and receiving help at an attractive rate. The scheme was developed by a Russian billionaire, Sergei Mavrodi who was jailed having caused turmoil in the financial system of his home country some two decades ago. Many people went bankrupt and a few committed suicide after his “overnight make me rich scheme” went bust. Mavrodi declared MMM bankrupt on December 22, 1997, subsequently disappeared, and was on the run until his arrest in 2003. In 2007, Sergei Mavrodi was found guilty in a Russian court of defrauding millions of investors of 110 million rubles ($4.3 million). Over the years, Sergei Mavrodi has modified the scheme and has introduced it to several countries around the globe – particularly emerging and frontier markets (including our dear own Nigeria).

Suffice to say, MMM will go bust one day, the question is when?Furthermore, the business model is not sustainable. I kept trying to figure out whether MMM invests in businesses that generate returns. If otherwise, where does the 30% interest which the scheme pays come from? According to the theory of “Zero-sum game” – one person’s gain is a loss to another. This means that someone must pay for the free lunch – if not you, then those coming after you. Have you taken time to ask yourself “What is in this for Mr. Sergei Mavrodi of MMM”? “How do the operators make their money”? “What is the value being created that generates the extra interest being paid”? There are clearly more questions than answers.

The Security and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN) have issued a scam alert on MMM and the House of Representatives has constituted a “Committee” to investigate the scheme. Whilst we await the outcome of their investigation, we should remind ourselves about some basic tenets of investing – is it sustainable? Sustainability is not about if someone has made money from it, it is about if people will continue to make money from it. A scheme that gives you money without receiving any value in return is a scam. Lastly, why will someone pay you 30% monthly for investing? This is equivalent to 360% annually (simple interest) and 2230% annually with compounding interest – this is ridiculous and unsustainable.

Even if the past is not a perfect predictor of the future, it remains a good guide. Remember that all earlier Ponzi schemes have failed – Nospecto and the popular Wonder Bank schemes happened in the not so distant past. They once seemed like the real deal and many people made money from them. They spread like wild fire but went out with a great bang. When these schemes fail, they do so spectacularly. The attendant losses are much greater than the gains and the longer they last, the deeper the holes they create.
Olabode can be reached at

In this article:
CBNMMMSergei Mavrodi
Receive News Alerts on Whatsapp: +2348136370421


    This is what people refuse to face.

  • bobo

    I don’t know why people forgot about Planwell and Umana Umana, among others, so soon.

  • kingzara

    Dear Olalekan Olabode try to free yourself from the chain of slavery and low mindset, Let me give you some fact before you open your mouth and talk more none sense, Few years back Globalcom Nigeria got an idea to bring internet directly from the European nation to Nigeria everything via cable today they have the best internet in Nigeria, My best friend in School died immediately we graduated, that’s a well calculated bright and a sure plan but it’s a loss to his family now and finally the government of Nigeria (My Country to be precise) have in 2017 budget N436 million Naira to buy cars for all past president despite the harsh recession, before you judge and criticize others tell your so called SEC, CBN and House of Representative to stop fooling you they should provide an alternative instead they are busy taking huge amount of money per sitting on this issue, Life is all about risk taking. Olabode your two greatest mistake you made in your life was to write a senseless article criticising people sources of income without giving an alternative and secondly remove your stupid email from public view. The Guardian should screen people who write article for them. Don’t deceive people or add panic to their life, if you don’t have a solution, shut up period, I hate paid ads like this.

  • @ Kingzara. Your attack on the author is too vitriolic. Pheww!!! He merely advised people to use their sense and not to forget the past too soon. You read like an “investor” in the scam.

    • kingzara

      @Bobosca:disqus , I have nothing to do with the said scheme, my anger is that the author is too blind folded, that he’s making mention of bigger scam like SEC, CBN and house of reps. If SEC, CBN and house of reps members urged FG, state government, ministers, the local government and counscil areas of the FCT to create job opportunities and to pay outstanding (debt) salaries to staff of this great Nation, fewer people would invest in the scheme, i’m guessing that this author was paid to post this article to distract people. I like the Guardian and i can’t go a day without reading it, so when something is wrong i can speak it out.