The MMM financial scheme caught on like wildfire in Nigeria but it
has frozen its transactions, leaving many investors unsure what
will happen to their savings.
The BBC's Stephanie Hegarty explains how the Ponzi scheme found its way to the most populous nation in Africa and how it managed to survive.
What is MMM?
Well, that depends on who you speak to. According to MMM itself,
it is a "social financial network of people providing help and
getting help from each other"
Members are supposed to receive 30% back on their investment in
just 30 days. It launched in Nigeria in November 2015 and
according to its founders, has three million members.
But it has a murky history. It started in Russia in the 1990s and
collapsed a few years later losing an estimated $100m (£80.3m)
belonging to its members.
The Russian government outlawed the scheme and founder Sergey
Mavrodi was jailed for four years
It made its way to China where it was also banned. But in the past
two years, the scheme has appeared in South Africa, Zimbabwe,
Kenya, Uganda and Nigeria.
Nigeria's financial regulator, the Securities and Exchange
Commission (SEC), say it is a Ponzi scheme.
That means money paid in by new members is used to pay back
previous members. It doesn't generate any profit but relies on new
members to keep going, which means that sooner or later it will
"No profit is being created," says economist Tunji Andrews. "And
the people that are going to pay for all your profit right now are the
people that are going to get stuck when MMM finally crashes."
How does it work?
Members either sign up online or with the help of a "guider" - a
member who gets commission to recruit more investors.
To start, one can invest as little as 15,000 naira (£32; $40). That
money gets paid directly to another member.
The idea is that after 30 days, every member reaps their profits.
"Guiders" get a 10% cut of the new members' investment.
Over the past few months, MMM Nigeria has undertaken an
aggressive advertising campaign and used community forums and
church meetings to recruit members.
Why are people talking about?
On 13 December, the scheme was frozen. Members who expected
a pay-out since Tuesday have been disappointed.
MMM claims it froze the scheme to deal with heavy traffic that it
experienced in the run-up to the Christmas holidays.
It says it will re-open in January and though many people are
sceptical, others have staunchly defended the scheme.
Nigeria is in the middle of its worst recession in decades. Banks
are not lending and so many people are hailing MMM as a source
Since it first appeared in 2015, authorities have issued warning to
Nigerians against investing. In a country that does not have a
huge amount of trust in its government, millions ignored that
Seven people, who do not wish to be named, explain how they got
involved in the scheme. We will call them by different names.
Margaret, a farmer from Port Harcourt told me that MMM was "a
blessing". She used it to pay rent when her business slowed due
to the recession.
Similarly Yinka from Ilorin described MMM as "beautiful". He was
able to pay his school fees and buy a printer. Both are optimistic
the scheme will work again.
Most of the people who spoke to our team had initially made good
returns on their investments, compelling them to invest huge
amounts later. Unfortunately for them, the company froze its
Isaac invested 50,000 naira in the scheme and got his returns.
Two days later he invested 950,000 naira. He was supposed to get
his money back on 14 December. So far, he has received nothing.
MMM say it is up front about the risks. A warning on its website
reads: "The only rule is no rules… "Win" might not be paid without
any reasons or explanations."
All the investors we spoke to admitted that they had been aware of
the warnings but thought the risk was worth taking.
Have people lost their money?
At the moment, it is unclear whether investors will get their money
back but authorities in Nigeria believe that it is inevitable that
people will lose out. There is not enough money in the system to
carry on forever.
Folusho Awosanya claims to be the spokesperson for MMM. I
found his number after browsing the MMM website.
He told me in a phone interview that the earnings of investors "are
being calculated but will be paid to them when MMM Nigeria
unfreezes its activities".
He however, was unable to indicate exactly when that will happen.
Even if MMM reopens in January as it claims, it is likely that the
scheme would collapse at some point.
Is MMM breaking the law?
According to the privacy laws of SEC, once a scheme like this gets
a certain level of investment it must be registered.
MMM is not registered with the financial regulator so technically, it
could be breaking the law.But the SEC has not yet taken any
active steps to prosecute it.
What happens next?
Members have to wait until January to see if MMM is as good as
Until then its investors can only hope to get their money back.
But MMM is under no legal obligation to return it.
If the scheme does "unfreeze", that might encourage more people
And that means even more people are at risk of losing their