How Three Million Nigerians Lost N18 billion to MMM Ponzi Scheme

Two years ago I became aware of a platform known as MMM. I expressed concerns about MMM and was immediately insulted by the many people who were at the time enjoying a system which saw them making large profits just one month after "helping" by donating funds. At that time, MMM had made its way to the philippines under the name MMM-Philippines. MMM-Pilippines crashed some months after launching and the result was nothing short of devastating to the last helpers/victims.

While MMM claims to not be a bank, online business, HYIP, investment or MLM program but rather a community where people want to help each other; it undoubefully follows a ponzi scheme model which makes it similar to most of those things it claims not to be.

How MMM works: By donating money to a member on the platform as well as doing additional tasks such as publication and recruiting, after one month, you can receive help (funds dontated by other members) 130% to 150% of your donated funds. For example, if you helped by donating $100, you may receive $130 (130%) to $150 (150%). The problem here is, the people donating are also the ones in need of help.

Let's simplify a community of helping people to just two participants. Poor1 helps by giving $100 to Poor2. At the end of the month Poor1 can demand for help in the amount of what was given plus a bonus of $50 making it a total of $150. Poor2 now gives $150 to Poor1. After one month, Poor2 can now ask for the amount of that was donated plus $50 bonus. Poor1 then gives $200 to Poor2. After 1 month of waiting poor2 can now ask for help from Poor1 in the amount of $250. It continues for several months until poor1 has given $3000 as help. He then request help of $3050 from Poor2 but Poor2 can no longer help. Poor1 is now devasted because he thought he would always receive help after a month of helping and gave away his last savings. The end result is that one is left with more and the other with less. The longer it continues the higher the loss for one and the greater the gain for the other.

It wasn't too long after that MMM had moved to Nigeria, an ideal country with a large population faced with an economic crisis. People were desperate for money to sustain themselves so it was with no surprise that as soon as a few people started to make a profit from using the MMM platform there was a glimpse of hope and out of desperation many people jumped on board. MMM quickly gained popularity reaching a total of 3 million participants. As expected, MMM crashed with participants losing a total of 18 billion Naira (nigerian currency).

Despite this, some people still believe MMM failure was due to the government's intervention. Whether that was the case, MMM was doomed to fail from the start.