“Mystery creates wonder
and wonder is the basis of man’s desire to understand”
Certain events occur in
life that we find quite difficult to wrap our minds and thoughts around. It
took me a while to make up my mind on the need for this write up. Why? Because
I just can’t seem to understand what is going on – I see irrationality every

There has been a recent
craze in the Nigerian financial sector that I am sure a lot of you are aware of
– MMM. From my research, MMM is a scheme that enables its participants to earn
an interest of 30% per month on the capital pledged into it. Hence, making it
some sort of investment. This was my initial understanding. However, further
probing revealed interesting findings which led to my conclusion that it’s more
of a Ponzi scheme where money flows between participants without recourse –
some sort of an Hybrid Ajo
A common term of the scheme – provide
help and get help –
started to ring bells in our ears from its very courageous
. I call them courageous participants because my
discussions with the participants who market – some have taken it upon
themselves to self-market to earn a bonus – made me realize that sufficient due
diligence was not been done on where and how their return on capital will be
generated to pay the 30% interest prior to making their pledges. 
If we think of the annual
interest to be earned by pledging to MMM which is 240% (12 x 30%) return on
capital, one sees irrationality coming to play. Let me reiterate; 240% return
per annum. Seriously!!!!! Then the available capital in Nigeria should be
diverted to MMM as the traditional knowledge on capital allocation is that
capital should be allocated to resources that generate the highest return. Even
entrepreneurs like our boss; Aliko Dangote, should be into MMM. Banks should
also cease to exist. I don’t even think there is a company in the world (yes,
the world) that provides a return of such figures to its shareholders. (if you
know such company please contact me). 
Also, I see Nigerians
exhibiting the recency bias. This is a behavioral cognizance where
people tend to remember only recent events and wipe out the memory of all other
events that had previously occurred. In Nigerian terms, this is synonymous to “As
E Dey Hot
”. This is a normal behavior in Nigeria; everybody wants to be
involved in the latest trend, events, happenings etc. The “do not let it
pass me by
” syndrome. Funny how we have forgotten about the Nospecto and
Wonder Banks of early/mid 2000’s and how they dealt with us. For people that
certainly do not recall, please google them up and read stories. 10 years ago
is not too far off, probably in 10 years’ time schemes like this will spring up
again.- that is if MMM does not last till then. Additionally, I see traces of
the Herding behavior where people do things just to follow the crowd so
as not be seen as losers or fake people. In Nigeria, this is also known as the
Follow-Follow” syndrome – The act of doing what the people around you
are doing, even if you do not know what that are doing. 
Could all these behavioral
biases be the reason for the MMM prominence?
Going further to look at
the impact of the MMM Craze on the world I am most passionate about – the
Investment Sphere, I get scared and see a serious disintermediation risk occurring.
The fact that Nigerians are pulling money out of Mutual Funds, Banks etc just
to participate in MMM is absurd. Moving money from the safe to the unsafe
leading to unexplainable excessive risk taking. Investors are now demanding for
returns equivalent to the 30% per month promised by MMM. If it can’t be
matched; No Deal. Investors have started asking industry operators to find out
what MMM is doing and replicate it. 
One of my unsolved puzzle
in the Nigerian investment industry is that the industry is controlled by
foreigners. Occasionally, I hear industry operators’ concerns about the lack of
foreign participation and how they watch out for monetary policies that
increase foreign capital participation in the market. So where are all the
domestic investors and their capital? Nigerians save but where do the money go?
At least for now will it be safe to say MMM?  
The MMM trend has got a
lot of Nigerians wagging their tails. They have wagged their tails so bad that
there are indications that the National Assembly wants to enact a policy to ban
MMM. I doubt if that ban will succeed. Why? Because it’s a rage and when
Nigerians are crazy about something you dare not interfere. 
So what has MMM done to
make Nigerians – the poor, middle-class and rich – bring their money out from
their hiding places to take such excessive risk? The risk in excess of
equity investing. I have mentioned below some of the reasons I believe MMM is
currently a hit in our environment.
1) The love for big
returns: the 30% interest per month was very attractive. This may be true
because recently, there was the Treasury Bill craze (discussion for another
day) ; 
2) Timing: MMM caught us
at the right time when recession kicked in hard and there is a need for money
to match rising cost of living; 
3) Greed: Nigerians like
quick money. The love to earn money we did not work for. Fast money syndrome. 
4) Social Media: helps in
self marketing MMM. A lot of people brag about their winnings on social media
platforms which has got other people interested – the “Follow-follow” syndrome
So the question is “How
long is this craze going to last?” Why? I have observed that the MMM model is built
on participation and the moment the participation seizes and money stops to
change hands, the participants left holding the bag will be left stranded. This
brings to mind the drinking game we indulged in while in school where someone
spins a bottle and the person the bottle is pointed at when it stops spinning
drinks all the beer in his cup. 
So imagine the MMM craze
stops while you just provided help, who will be there when you want to get
help. Aha!

Photo Credit – www.behindmlm.com