By Francis IKHIANOSIME
“Advice is one thing that is freely given away, but watch that you only take what is worth having” George S. Clason.
George Clason’s book, “The Richest Man in Babylon” (1926), remains one of the most auspicious classics published on investments and money making. After this, several other groundbreaking books on investments have taken cue; from Napoleon Hills’, “Think and Grow Rich” (1937) to Robert Kiyosaki’s “Rich Dad, Poor Dad” (1997). The central theses of these are; laws of good investment, entrepreneurship, hardwork, creative thinking, right planning in making money, etc. Time-honoured laws have been gleaned from these writings and which are even thought in business schools and entrepreneurial classes. However, the more economic circumstances changed, the more there were newer ways of generating money. While some are good, others could be termed bad; while some are ethical, others are unethical. As economic conditions dampened, newer ways arose. Different schemes are beginning to thrive. In today’s Nigeria, there is the rise of Ponzi schemes like never before. Ponzi has taken over the cyberspace with an aggressive popularity and a mouth-watering pledge that any capital plunged into it would receive an astronomical Return On Investment (ROI). This no doubt would be a soothing Midas touch and a needed magical wand for today’s scorching recession. The interesting part is that the converts are on a geometric rise more than any religious group can claim proselytization and the new followers know little or nothing of the perils of this venture or of Ponzi schemes.
According to the leading online financial dictionary, Investopedia, 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 backers. For both Ponzi schemes and pyramid schemes, eventually there isn’t enough money to go around as the schemes unravel”. Ponzi is named after the first notorious scheme orchestrated by Charles Ponzi in 1919 which eventually crashed after a year. In Nigeria, from late 2015 our public space was awashed with different Ponzi schemes. In 2016 a new Ponzi called MMM launched a website to target the Nigerian audience. “MMM was a Russian company that perpetuated one of the world’s largest Ponzi schemes of all time. It was established in 1989 by Sergei Mavrodi, his brother Vyacheslav Mavrodi and Olga Melnikova. The name of the company was taken from the first letters of the three founders’ surname” and the acronym MMM stands for Mavrodi Mondial Moneybox. Since then, other Ponzi sites have emerged. In fact, 2016 can be called the rise of Ponzi Schemes in Nigeria.
Today, leading Ponzi Schemes in Nigeria include: (1) MMM Nigeria; a scheme that promises 30% return to its members. The Amazon Company, Alexa.com that records website traffic statistics reportedly places MMM’s website as the 10th most visited site in Nigeria. The site’s home page reads: “This is a community of ordinary people, selflessly helping each other, a kind of the Global Fund of mutual aid. This is the first sprout of something new in modern soulless and ruthless world of greed and hard cash. The goal here is not the money. The goal is to destroy the world’s unjust financial system. Financial Apocalypse! Before you join, be sure to be acquainted with our IDEOLOGY!” I read up their ideology which was sheer rhetorics and windy emotional text of financial proselytization. It seeks to thrive by destroying existing financial systems, and castigated the basis for banking, yet it relies on banks for the transfer of funds. What an utter contradiction! As a scheme, it is opposed to existing financial status quo while promising a new order. In sum, the lengthy thesis on its ideology is nothing but financial radicalization. I went further to read up on their legality and they make us understand, there is no need to be legal, or of registering the system. It only involves a revolving mutual fund.
More so, on the website is a boldly highlighted caveat: “Warning! There are no guarantees and promises! Neither explicit nor implicit. There are neither investments nor business! Participants help each other, sending each other money directly and without intermediaries. That’s all! There is nothing more. There are no securities markets; you do not acquire any securities. (Do you need them?) There are no rules. In principle! The only rule is no rules. At all! Even if you follow all of the instructions you still may “lose”. “Win” might not be paid, without any reasons or explanations. And in general, you can lose all your money. Always remember about this and participate only with spare money. Or do not participate at all! Amen” This Ponzi scheme like other fraudulent online gamble schemes defies elementary principles of right investment in economics, which is collateral. Yet, today, on MMM alone it is reported that there are over 3 million Nigerians signed up to it; both the rich and poor, literate and illiterate. But because many Nigerians, purportedly do not read up manuals or instruction leaflets before use, many have been coned by the cajolery and empty promises of this scheme. Not many, supposedly, have also read of its failure rates in other nations. In January 2016 the Chinese government banned MMM on the grounds that it is a pyramid scheme, and it is not registered in the country and crashed almost concurrently in Zimbabwe. It has also crashed in the US where it had a long boom. The online encyclopaedia, Wikipedia, notes that by different estimates from 5 to 40 million people lost up to $10 billon in MMM.
In Nigeria, the Central Bank of Nigeria (CBN) has warned consumers not to deposit money in any institution that is not insured by the Nigeria Deposit Insurance Corporation (NDIC) as part of a warning against the rise of MMM and other Ponzi schemes. This warning followed fierce resistance. Then, the house of representative ordered a probe into it (MMM) and hell was let loose on the cyberspace. In fact, a number of new Ponzis sprang up ranging from: Ultimate Cylcer whose website is ranked the 15th most visited site in Nigeria. There are also Givers forum whose website was registered only in October 2016 and has become the 47th most visited site in Nigeria. There is also Zar fund, Icharity, Crow Rising, Get Help Worldwide, etc. The philosophy of these Ponzi schemes is the same.
The fast growth of these fraudulent schemes in Nigeria tells us much of Nigerians and their mentality. First, it tells us of that we are a people who want to make profit from not working. The mentality of profit without work is not only debasing, it is one of the secrets of financial penury. It is the mentality of seeking a free lunch. Robert Greene’s 40th law in his 48 Laws of power is “despise the free lunch”. It tells us that as a people, for the most, we can gladly and unscrupulously take that we have not invested in. Once, a man came to me to appeal for assistance and seeing that he was apparently not physically challenged, I offer to give him a job so as to pay him; he walked away sorrowfully like the Biblical Rich Man from Jesus. This explains that there are people who have neck-deep into a give-me-without-work mentality. Nigerians involvement in Ponzi schemes is a parable of an indolent people; a people where pleasure comes before suffer, privileges come before obligation.
Further, Ponzi opens up the fact that we are a nation suffering from acute amnesia. Bishop Hassan Kukah argues that Nigeria suffers from a chronic lack of a sense of history that is not pardonable. In the 90s, there were different and domestic forms of Ponzi in Nigeria. In Benin then, there was “Planwell”, “Goldland”, “Arise and Shine”, etc. There were many others in some other states. However, because, Ponzi thrives as long as there is cash flow, it crashed not long it started plunging many then into untold and unprecedented hardship and misfortune. The rise of these new Ponzi in Nigeria has come with the same content and a new label and we have just forgotten to remember our history on this. We have forgotten to remember the many lotto terminals that have led many pensioners to suicide. We have forgotten the ghosts of coupon centres due to poor patronage and lack of cash flow or winning chances. We have forgotten cases of suicide due from mammoth losses, yet, some plunge their whole fortune into it. The addictive part of all these is simple, “we don’t quit while we are ahead”. And as long as we play on, there is an inevitable watershed.
Be that as it may, for those who are literate or learned enough, they know that since there is no financial base and collateral, for every beneficiary, there is a looser and someone suffers. This is the “Machiavellianization” in investment or finances. Our society is gradually thriving on the Hobbesian state of Man being wolf to man. The difference with Ponzi is that, unlike the Hobbesian state when there was outright personal and physical overturn, in Ponzi there is an indirect financial overturn or swindle. For every gain one person makes, one or more persons have been swindled. This makes it financially immoral or unethical. It is not based on any direct investment, yet the spill over is bountiful, this should make it all the more disturbing and should concern any morally-minded investor.
Ponzi tells us that Nigerians are great risk takers. It tells us that the harsh economic situations can make us do anything and we can justify it. It tells us, many have lost the true laws of gold. It suffices that the basis of enterprenuership and income generation are frugality, discipline, hard work and wise investment. It is expedient that all who want to venture into investment should venture wisely. Clason in The Richest man in Babylon, gives five laws of gold. While some of these laws have being contested and reconstructed, it suffices for the case in point, to recall the wisdom of some of these laws. Law 3 has it that, ” Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling”. Law 4 maintains: ” Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those who are skilled in its keep” and law 5 holds, ” Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment”. While, I do not subscribe that Ponzi have spiritual undertone or overtone, I subscribe that it is an unethical and unwise investment and only a stitch in time can save nine, least we become victims of an impending crash and a “humpety-dumpety” financial fall.
*IKHIANOSIME is a priest of the Catholic Diocese of Auchi. He writes via: franklmore@yahoo.com
