Multi-Level Marketing and Ponzi Schemes Used To Cushion The Effect Of Economic Downturn.


Thursday, 02 February 2017 6.06AM / NOI Polls

Latest public opinion poll results released by NOIPolls Limited have revealed that in quarter 4 2016 Nigerians turned to Multi-level Marketing and Ponziy schemes to cussion the effect of the economic downturn as 68 percent disclosed their participation or that of someone they know in such  schemes. Among all the various schemes in the country, MMM seems to have more awareness (59 percent) and the quest to quickly find an alternative means of livelihood which was welcomed by the wave of economic uncertainties in the country would have informed this level of awareness and participation; As the recession bit harder in Q4 2016, coupled with the high inflation rate, citizens were left with no other options than to embrace such financial schemes introduced to them mostly by friends (65 percent), especially when it portrays the potential to turn out quick and high interest return on investments.  

More findings revealed that quick turnover (55 percent) and poverty (26 percent) were the major reasons most Nigerians chose to participate in the scheme and despite all the efforts of the various agencies of the government to discourage the participation of Nigerians in what it describes as a dangerous scheme, the call fell on deaf ears as participation in the scheme increased by the day; moreover 38 percent of Nigerians were also of the opinion  that the scheme is unreliable. These were the key findings from the Social Financial Networks poll conducted in the week of December 9th, 2016. 

Brief Background

2016 appeared to be a particularly tough year in Nigeria hence, some Nigerians participated in the social financial schemes in querter 4 (Q4) of 2016, with the hope to cushion the effects of the perceived hard economic times. Social financial schemes are platforms where people of like minds and same thoughts come together for the sole aim of a common purpose of providing mutual aid funds to each other. There are several social financial chemes on the rise in Nigeria such as Ultimate Cycler, Mavrodi Mondial Moneybox popularly known as MMM Nigeria, iCharity, Zarfund, Helping Hands, Givers Forum, just to mention a few[1] and their proliferation could be connected to the present economic realities in Nigeria. Therefore, whatever form such social financial schemes take, in as much as it has the potentials to provide extra source of income, Nigerians would embrace it, so as to cushion the effects of the present day hardship.

Among the many platforms that offer such perceived opportunity of monetary turnover, MMM seems to be most embraced, however, the Securities and Exchange Commission (SEC) in Nigeria had warned citizens in August 2016 against their activities, declaring it a Ponzi scheme paying returns from the invested funds of others.[2] By mid-December 2016, the scheme suspended all its participants account temporarily, citing heavy workload on the platform, therefore, claimed to be restructuring the site to accommodate growth though the scheme returned mid- January but with new rules regarding withdrawals of confirmed accounts.[3] In view of this, NOIPolls conducted a survey to ascertain the awareness and views of Nigerians regarding Social Financial Schemes with a special focus on MMM to gauge the perceptions of Nigerians regarding its reliability and the level of their participation in the scheme.   

Survey Findings 

The findings revealed that MMM ranked highest in awareness with a larger proportion (59 percent) of the respondents acknowledging they have heard about the scheme and this cuts across  four geo-political zones except the North-East and the North-West, which ranked low in awareness level. Further findings showed that respondents aged between 18 – 35 years had the highest level of awareness (66 percent) and this statistics could be associated with the fact that this is the most adventurous and active age group in the society. Also, unemployment amongst this age group is very high, therefore, pushing the youths to discover other sources of financial breakthrough to survive.[4]  

In addition, Ultimate Cycler proved to be another social financial scheme which some Nigerians (11 percent) are familiar with..  Other mentions includes Helping Hands (6 percent), iCharity (4 percent) and Givers forum (3 percent) among other schemes. On the contrary, 53 percent of the respondents claimed not to have heard about any of these social financial schemes.  


The survey revealed that out of the 59 percent of the respondents who acknowledged being familiar with the MMM scheme, a larger proportion (65 percent) disclosed that they heard about the scheme from a friend. It is also interesting to note that 20 percent asserted that they got to hear about the MMM scheme through the social media while, 13 percent attested to hearing about the scheme from their colleagues, among other sources. 


Subsequently, the survey sought to gauge the level of involvement  of Nigerians in the scheme and 68 percent of the respondents surveyed indicated that they participate or know someone who participates in the scheme. Conversely, 32 percent of the respondents claimed that they do not participate or know anyone that participates in the scheme. 


The poll also revealed that 38 percent of the respondents believe that the scheme is reliable whereas 38 percent thinks that the scheme is not realiable. This represents an equal and opposite division of view however, 24 percent of the respondents were neutral.  


Lastly, quick turnover (55 percent), which forms the majority, and poverty (26 percent) were the top reasons most Nigerians participated in the scheme. The South-West zone had the larger proportion of Nigerians who stated quick turnover while the South-East zone accounted for the highest fraction of the respondents who asserted that it is as a result of poverty. Other mentions includes unemployment (7 percent), greed and desperation (6 percent each). 


In conclusion, the poll results have revealed that some Nigerians are aware of some social financial schemes with the MMM scheme having the highest level of awareness (59 percent) among all other schemes and 65 percent of this proportion reported hearing about the scheme from a friend while 20 percent stated social media. More findings revealed clearly that the dominant age in term of participation in the scheme are between the ages of 18-35 years which akso consist of the labour force, therefore, there is need to reduce the level of unemployment by urgently creating more jobs within these age category. Also, 38 percent thinks the scheme is unrealiable and this shows that those who invest in the scheme are still wary of being duped but could not help it, due to the country’s economic hardship. Finally, quick turn (55 percent) and poverty were the major reason people participated in the scheme therefore, the  government of Nigeria should consolidate its concerted efforts to create a very conducive enabling environment for businesses to thrive in the country.

Survey Methods

The opinion poll was conducted in the week of December 9th 2016. It involved telephone interviews of a random nationwide sample. 1,000 randomly selected phone-owning Nigerians aged 18 years and above, representing the six geopolitical zones in the country, were interviewed. With a sample of this size, we can say with 95% confidence that the results obtained are statistically precise - within a range of plus or minus 3%.

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