Thursday, March 22, 2018


MMM is trending here in Nigeria. Every week, I get an average of five invites across all social media platforms to join the MMM ‘movement’.  In the unlikely event that you have not heard of MMM, having just emerged from a cave to miraculously run into this article, MMM is a platform which in summary claims to operate a mutual aid programme requesting participants to provide money to others and promising returns of 30% of such monies after 30 days.

It is a global platform touted as a Ponzi scheme (as it obviously is) and reported to be operated by Sergei Mavrodi, a Russian jailed in his home country in the late 1990’s when his earliest schemes ripped Russians millions of Dollars and led to multiple suicides.

The Nigerian adaptation is an ingenious creation displaying an understanding of the culture, beliefs and thought processes of the typical Nigerian. Its model stands out as a lesson for all entrepreneurs looking to push their products into new markets.

Apart from these lessons however I have had the opportunity to discuss the platform with colleagues and there seems to be no debate on the status of the platform as a Ponzi Scheme as it does tick all boxes. See here for hints.

Regardless of its status as a Ponzi scheme however, I still get people telling me how it is still a useful source of quick cash before it crashes. For the following reasons, this position as pragmatic as it sounds does not quite resonate with me and, I believe, a lot of entrepreneurs out there trying to build a product.

Promise of big money consistently with little work


Entrepreneurs know that there are of course things that you can do to make money without having to work all that hard. But, it’s just not possible for everyone who joins a business to be able to make so much returns without working. Making money takes work. Entrepreneurs also know that NO business on earth can consistently provide such returns. Businesses have ups and downs simple.

The Principle of value

Real entrepreneurs understand that real wealth is generated from the creation of value and not from instantaneous windfalls resulting from concocted trade-offs. They understand the paradox of the lottery winner…money minus value does not equal wealth.

Understanding Money

Real entrepreneurs understand that money is really not valuable in itself. It is valuable because people agree to make it a medium of exchange for REAL value. Its utility lies in its use as current (hence currency) for the movement of value thereby obviating the need for barter. A system running merely on the exchange of money for profit is nothing but a SCAM. Participating in such a system like that only lends credence to the scam.

Not an investment


I have heard people liken the MMM system to investing in shares.  The comparison is laughable. When an investor buys shares, he is taking real risks to contribute into an entity that undertakes in the creation of some sort of value.

Investing in shares takes careful thought, analysis, and assessment. He does not expect consistent returns. By buying shares, the investor expresses faith in the vision of the company and faith in the management to execute the vision. It takes knowledge to avoid serious burns. So NO, MMM is not comparable to investing in shares.

The issue of focus

Entrepreneurs are busy trying to create and perfect systems, solve problems, devise innovative answers to challenges. They are bound to look at a get rich quick scheme as a mere distraction in terms of the time and resources to be expended into chasing a venture that provides no ultimate value addition to themselves or the society.

The moral question

If you are sure that a system is a scam propped up by the resources of naïve but trusting participants being manipulated by experienced “confidence men” with an uncanny understanding of human greed and a history of taking advantage of it, would you still support it with your money?

The understanding of risk

Proponents of the scheme tout the cliché; “Nothing ventured, nothing gained” because it paints the contrarian picture of a daring risk taker. Entrepreneurs however understand the difference between gambling and enlightened risk taking. A gamble is taken without the understanding or control of the variables which determine the desired outcome.


Investing involves enlightened risk taking premised on an understanding of key variables and a reasonable grasp of possible eventualities. If I commit to give my money to a scheme over which I have no control, because of returns of which I have no sight, I am not investing, I am gambling.

The times are hard. Nigerians are seeing the MMM scheme as some sort of saviour from the harsh realities of the current recession despite the obvious signs that it is not. To all those who cannot resist the temptation of quick easy cash, please proceed with extreme caution. To all those who do not participate in the scheme as a matter of principle, know that you are not alone.


About the Author: Enyioma Madubuike is a lawyer, writer and entrepreneur. Join him on Twitter where he engages in public interest discussions @philkingenyioma.

The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has predicted that the nation’s economy will likely come out of recession by the fourth quarter of this year when the result of the various measures put in place by the Federal Government and the monetary authorities becomes manifest.

One of such measures, according to him, is the decision of the CBN to establish a bridge fund for the government to utilise to stimulate the economy whenever there is a need for it.

Emefiele, who spoke to media executives in Lagos on Saturday, said, “We are already in the valley, the only direction is to go up the hill and the government is doing everything possible to ensure that we move up the hill. I am optimistic that based on the actions being taken by the monetary and fiscal authorities, the fourth quarter results will show evidence that we have started to move out of the recession.

“The worst is over. The Nigerian economy is on the path of recovery and growth. So, please if you are a bystander or sideliner, you are losing; join the train now before it leaves the station.”

While explaining the reasoning behind the bridge fund, the apex bank boss said, “Both the monetary and fiscal authorities are working together and that is why you can see a situation where today even when we have revenue shortage or deficit, the monetary authority is trying to bridge the gap.

“We said to the fiscal authority that we can give you a bridge to go ahead and spend, and when you obtain the foreign loan that you are negotiating, or when your revenue improve, you can repay the bridge that we have created for you in order to stimulate spending. That is a practical case of collaboration between the monetary and fiscal authorities.”

He alluded to the release of another batch of N350bn by the Ministry of Finance to stimulate the economy as another measure taken by the government to get the nation out of recession.

Following the introduction of a flexible exchange rate regime, Emefiele said foreign investors’ interest in the Nigerian economy was gradually increasing, adding that in the last three months, almost $1bn in Foreign Direct Investment had come into the country.

He stated, “I wasn’t optimistic that the FDI would come initially, but with what we have seen in three months, almost $1bn, I feel very confident that there will be more inflow into the system and more and more people will have foreign exchange available for them to do their business.

“That will improve industrial capacity. The rate may be high now, but there’s high possibility that with more availability of foreign exchange, the rate will come down. I am very optimistic that a lot of positive things will happen.

“I have talked about how the fiscal authority is trying to push in liquidity to stimulate consumption, demand consumption expenditure; and of course, when consumer consumption is stimulated, demand for goods will go up and if the demand goes up, the industrial capacity will improve. If we maintain a steady course in the way we are going, and if all those who have foreign exchange repatriate them, more and more people will have foreign exchange to do their business, that will improve industrial capacity.”

Another way to inject liquidity into the system, according to the CBN governor, is for the Federal Government to sell some of its assets in the oil and gas industry in order to raise money.

Emefiele said, “In April 2015, even before this government came on board, I had opined that there was a need for the government to scale down or sell off some its investments in oil and gas, particularly in the NNPC and the NLNG, at that time when the price of oil was around $50-$55 per barrel. We actually commissioned some consultants that conducted a study and at the end of that study, we were told that if we sell 10 per cent to 15 per cent of our holding in the oil and gas sector that we could realise up to $40bn.

“Unfortunately, the markets have become soft. If we choose to do that now, we can still get $10bn to $15bn, or maybe $20bn. If we have that kind of liquidity, it will be easy for us to really stimulate spending and also to turn the economy around. That proposal is still on the table, because I have also heard that some of our colleagues in the Federal Executive Council have talked about it and a lot of people too.

“If we take that option, I am optimistic we will be able to stimulate the economy and earn the foreign currency that we can really use to kick-start it.”

Another measure being considered by the Federal Government, according to him, is the shortening of the procurement process in order to accelerate the process of executing capital projects in view of the fact that the budget was not passed until May.

On the factors that pushed the economy into recession, the apex bank boss said the plunge in the prices of crude oil in the international market severely affected Nigeria’s earnings, in addition to the country’s inability to save when the prices were high and invest massively in infrastructure.

He also blamed unbridled appetite for the consumption of foreign goods for the recession, adding, “In 2005, Nigeria’s import bill was only about N70bn, but by 2015, Nigeria’s import bill had risen to about N790bn. What were we consuming?”

While reacting to the governor’s optimism that the recession would start easing off in the fourth quarter, economic and financial experts said on Sunday that it would be nearly impossible for the nation to come out of recession this year.

They said if the Federal Government implemented appropriate measures to tackle the problem, the country might be fortunate to witness a positive growth sometime next year.

“I am not sure we can come out of recession this year. Already, we are at the end of the third quarter. If the policymakers allow liquidity into the system and adopt appropriate measures, we may be lucky to come out of the recession early next year,” a professor of Economics at the Olabisi Onabanjo University, Sherriffdeen Tella, said,

The Head, Research and Investment Advisory, SCM Capital, Mr. Sewa Wusu, is of the opinion that the nation may not be able to come out of the recession until the second or third quarter of next year if appropriate measures are taken.

He said, “Recession is not something you come out of easily. It is going to be a long haul thing. We must take counter-cyclical measures to reflate the economy and get us out of recession. Nigerians need to be patient with the government. Countries that went into recession and came out did not come out so quickly.

“We need to spend money on sectors that can stimulate growth easily and also spend massively on infrastructure. Sectors that can stimulate growth, create employment, production and consumption, which we need to spend on are transportation, manufacturing and housing.”

The Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said, “It is not possible for us to come out of recession this year. There is a time lag between the time policies are implemented and the time we begin to see their effects on the economy.

“We are already at the end of the third quarter. The stimulus package will come in the fourth quarter. Before we can begin to feel the effect, it will get to next year.”

By Akinpelu Dada and Oyetunji Abioye. The Punch Newspapers


The Federal Government, in a bid to stimulate economic activities, on Friday said that it would release additional N350bn for capital projects captured in the 2016 budget.

The Minister of Finance, Mrs. Kemi Adeosun, gave the figure while briefing journalists on intervention measures being taken by the government to reflate the economy which is currently in recession.

She said that the provision of the additional N350bn brought the total capital releases made by the government to N760bn.

She said since the economy is currently in recession, the level of consumer demand would be reduced drastically hence the need for government to step in by injecting liquidity.

She said, “What government wants to do is to step in and begin to spend and push more money into the economy and then get things moving again.

“Since the budget was passed in May, we have released and cash-backed fully N420bn capital releases. As we speak now, we are about releasing another N350bn that’s between May and now.

“Of the sectors we spent the money on, of course the largest had been power, works and housing. Quite a lot has gone on defence,  because we need to rebuild the credibility of our army to continue in their efforts in the new phase; also interior and  transport.”

The minister said out of the N350bn, the government would be setting aside N60bn for the implementation of the social intervention programme.

She said the implementation of social safety schemes was vital as it would enable the government to provide direct cash of N5,000 to vulnerable Nigerians

She said, “There will also be the funding of about N60bn in the social intervention programme and that’s very important in terms of putting money into people’s pocket.

“Those are the programmes that we really cash-backed. The N5,000 to some of the poorest and most vulnerable, the home school feeding programme, which is very important.

“That will also generate economic activities in a lot of our local governments with women and maybe men cooking for the children.

“The graduates that will be going into primary schools as teachers so they will begin to get salaries/stipends from the end of the month.

Adeosun also assured Nigerians that the present economic recession would not be a prolonged one as the government was taking strategic steps to see that the recession ends soon.

She said, “We have a strategic plan that will take us out of the recession we have found ourselves in; we want to make sure the recession is as short as possible because we do not want a prolonged recession.

“From what we are looking at, we do not think that it will be a prolonged recession; we think that some of the initiatives that we are working on will now begin to bear fruits.

“We are on course and are confident that the plan we have put together will work and put the economy back on track.

“It is a long term plan that will reposition the economy so that we do not go into this boom and burst cycles that are driven by the oil price.

“The economy has to be more resilient than that so that we do not find ourselves back where we are.’’

Adeosun also said the government would be raising $1bn in Eurobond, adding that additional funds would be raised from the World Bank, African Development Bank among others at low interest rate of 1.5 per cent with repayment period of 40 years.

The proceeds from the Eurobond issuance is expected to get into the coffers of government by mid December

The fund, according to her, would be used to finance critical projects such as railway, ,health, agriculture among others.

She said, “We are raising money. The Eurobonds capital raising is on. We are about to appoint our advisers. We are raising additional $1bn.

“Two weeks ago, we approved the external borrowing plan. That was very important because we said we would be borrowing the cheapest money first.

“We have approved that plan from the World Bank, the ADB, with interest rates as low as 1.5 per cent with tenor as long as 40 years to intervene in some specific areas which include agriculture, education, health, rebuilding of the north east and railway projects which are very key to what we are doing.”

She also said the ministry was working with the Nigerian National Petroleum Corporation to get out of the Joint Venture cash call as this was affecting funds available for government projects.

She said, “This month, for example, from the Federation Accounts Allocation Committee, we only got N41bn from oil. We had to use N110bn to fund cash calls.

“If we had that money, we could have channelled it into the economy. We are working with the Ministry of Petroleum Resources and the NNPC to get out of the cash calls. That is the long term plan; to allow those joint venture to borrow money that they need rather than taking money from the Federation Account and that will improve the money in circulation.”

On the recovery of looted assets, the minister said that the committee set up to manage the assets was in the process of collating the non-cash assets such as farmlands, vehicles and houses.

She said that a fixed asset register would soon be opened to determine their value.

She said as a result of the efficiency in the management of government resources, huge savings had been made from the eviction of ghost workers.

She said in this year alone, about N100bn had been saved by the government from personnel cost.

“Sometime in January, personnel cost was N165bn along with pension cost, but so far so good.

“We have reduced through the removal of about 40,000 ghost workers from the personnel cost by around N10bn per month. Now we have saved about N100bn this year.’’

She said the budget support initiative, which allowed the government to provide N90bn as loan to states, has started yielding results as some states can now pay workers’ salaries.

Article from The Punch Newspaper

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