MMM for Life: An Outsider’s View of Nigeria’s Fastest Growing Fad

This article is one result of not having lectures throughout an entire week. Maybe if my university’s authorities had fixed classes every single day, I would be worried about not collapsing, and won’t have time to dabble into popular issues in Nigeria. Now that you know what led to this article, let me say that I would try to be as objective as practicable in the adjoining lines. Unlike the biased Central Bank of Nigeria, and the extremists at the other end of the spectrum, here’s a projection of MMM’s viability by a not-too-biased sceptic. Read on and decide for yourself.

Disclaimer: Even financial analysts when providing advisory services try to set up indemnities against personal liability. How much more an engineering grad with no financial experience! The data used here includes educated and crude guesstimates. No liability whatsoever is accepted if anyone decides to use this for investment decisions. The Excel file used is provided for anyone who wants to look at the logic and methodology that guided this modelling. Playing with the variables in that file can show interesting results.

Now, let me begin. MMM needs no introduction for many Nigerians and even foreigners, especially in Russia where it began. However, for the novice, here is a brief overview of the Mavrodi Mondial Moneybox. It calls itself a community of people providing and receiving help. At the simplest level, MMM Nigeria offers a 30% profit over a 30-day period. So, you “provide help” of say, ₦100,000, and after 30 days, you are entitled to “get help” of ₦130,000. You provide help by paying into someone’s bank account, and get help by another person paying into yours. This is MMM at the very basic level. Other bonuses come in such as a signup bonus of either $20, $50 or $100, depending on your level of investment. Then there is a 10% bonus for people who bring others into the pool, plus other bonuses for selected “guiders”, people who upload video testimonials etc.

To understand the attraction for MMM despite warnings from regulatory authorities in Nigeria, one needs to understand the economic conditions underpinning the average Nigerian’s life. With largescale unemployment and an underperforming business environment, Nigerians are seeking ways to make money. Hence, these ones care less if the “business” is not “real”, or if it is predicted to crash, or if it is being driven by fraudsters, or if some unfortunate ones would lose money in a crash. All they want, at least the majority, is to survive. The notion that most people are doing this out of greed is unfair. There is a reason something like MMM cannot thrive in developed economies like the US or the UK or Germany. Smartness is clearly not the reason.

Now that we have looked at some background information, it’s time to throw in some numbers. I tried getting real data for this model, but getting quality data in Nigeria is as difficult as the proverbial camel passing through the eye of a needle. While trying to get information, I visited the MMM Nigeria website, and was surprised at the level of organisation. These guys have an online customer service team. Seriously? Data was gotten from interactions with MMM participants alongside the MMM website, then some guesstimates were added to the mix.

The model began with 12 persons forming the core of MMM. Then, a growth rate of 40% (new users) per month was applied over a 48-month period. In a different scenario, the growth rate reduced by specified percentages after each 12-month period. In addition, it was assumed that 70% of the payable sum each month was removed from the system by users, leaving 30% for the next month’s investment. While it is clear that different users have different 30-day periods, this general timeframe appeared to be a practical way of modelling the cash flow. For the new cash inflow, the average cash capability of Nigerians was considered. Hence, users were split into those investing ₦5000, ₦20000, ₦50000, ₦100000, ₦400000 and ₦1000000 respectively. This simplistic generalization was to enable the modelling to proceed. These groups had 17%, 25%, 17%, 17%, 17% and 7% of new users respectively. Guider’s bonuses, video bonuses and any other bonuses (except signup and referrer) were not considered in the model due to lack of modellable data. An exchange rate of $1:₦400 was used in calculating the signup bonuses.

From the results, MMM can survive for at least 48 months if users do not withdraw more than 70% of their monies each month, and new users continue to join at the 40% rate each month. For the scenario combining 70% monthly withdrawal, alongside an initial 40% new users’ rate, reducing by 28% each year, plus the signup and referrers’ bonuses, the minimum 48 months would also be reached. However, if new users reduce by more than 28% per year, keeping other variables constant, MMM would crash in its third year. This crash occurs earlier if the reduction in new users is more drastic. Apparently, a greater reduction can be absorbed if users withdraw less than 70% of their monies, however, this was not considered.

If you are interested in more details, please see the Excel workbook. Before anyone takes these results at face value, please be aware of the data gathering limitations. However, the Excel file has been structured such that variables can be easily modified to see global effects over different scenarios. Also, note that the non-inclusion of some bonuses plus the cost of running the website and matching users (operating cost), which despite contrary arguments, I refuse to accept is being funded by website advert revenue, implies that whatever survivable timeframe is arrived at is very likely overestimated.

From this model, MMM participants can have some sense of pseudo safety about the money-making machine provided they can maintain whatever level of new users they currently have per month, and no largescale retrieval of funds occurs in any month. However, these two conditions are difficult to guarantee. For the former, there’s hardly any real business that can sustain rapid growth for a long time. Growth tends to level out over time. Already, some of the “new users” are actually old users opening MMM accounts with other people’s details (bank details and names). This means that there is already some form of ongoing false growth. In addition, over time, people would grow weary, maybe due to government warnings, or discouraging sermons (like this?), or lack of disposable funds, etc. Even if people do not grow weary, the population is finite, so at some point, there would be less people to join. In addition, there are now similar competing schemes springing up, which means that over time there would be competition for membership.

Regarding the second reason, panic requests for help (withdrawal) may be triggered by bad publicity or rumours of impending collapse. Such rumours may then become self-fulfilling prophecies. In addition, if users withdraw more than a certain amount in any given month, such that the new cash inflow is less than the due outflow for that month less reinvested monies, the scheme would crash. This is seen in the model where the scheme crashes in the second month because of this reason. In the model, this crash was treated as an abnormality due to the scheme just starting, and ignored. However, in real life, such an occurrence would mean that the operators would be unable to match those wanting help with those providing help. This possibility is already acknowledged by some MMM participants who are aware that if “Get Help” exceeds “Provide Help”, the scheme would crash. The recurrent task would be to ensure that this does not happen.

In the scenarios above, the underlying assumption is that the scheme is not being run by fraudsters, but by “good people”, even if they may be deemed a bit delusional. However, if fraud is considered, the situation becomes scary. Some participants would swear that fraud is impossible because “there is no central account”. What these ones don’t understand is that someone is doing the matching of providers to receivers. All that is needed for continuous fraud is for the operators to have henchmen with bank accounts to which other users would be directed to make deposits. As long as this cash diversion is done within certain limits, buoyed by new investments, it would not be noticed.

The introduction of bitcoins as a means of exchange would make large scale fraud more feasible. Bitcoins are inherently difficult to track; bitcoin being a form of cryptocurrency. If the United States’ government finds it hard (not impossible) to track bitcoins, what hope is there for the Nigerian government. Recent moves by the government to clamp down on MMM should be discouraged. Forcing MMM out of sight would make it harder to monitor. From the little I know, MMM has not exactly broken any laws, except maybe not being a licensed financial services operator. However, sending them underground would make it easier to perpetuate fraud.

From my analysis, using an initial base of 12 users, MMM’s total revenue grows to ₦36 million in one year. What would be the real revenue for thousands of users? This makes it lucrative if it is being fronted by fraudsters. If they are forced underground (forget about stopping Nigerians), Nigerians would follow them underground and bitcoin would become the de facto exchange medium. At that stage, considering the potential billions of naira involved, it would be easy to direct users to pay into a certain bitcoin wallet operated by the fraudsters, and that would be difficult to track. In my amateur opinion, I would say it is better to leave them within the banking system. The government can shout and look the other way, while monitoring the scheme. Then, should a crash occur, investigators can encourage people (with pledges of no-prosecution) to come forward with information of accounts into which they have paid money over a given period. There would be trends that would point to some “accounts” that have been receiving money consistently. With the bank verification number system in place, tracking the owners of such accounts should be easier than tracking bitcoins, even if the owners should run to any safe island in the Caribbean. This line of reasoning is workable if users regularly make offline notes of bank accounts into which they are directed to pay money, because when a crash occurs, the site and all transaction data would be inaccessible.

Please note that the three paragraphs above are purely theoretical. They simply consider the case where MMM is a fraud in process. The focus of this article is on the survival modelling of the scheme, trying to project how long it may last in Nigeria. This can be extended to many copycat schemes springing up, some even offering 100% profits per month.  While the government has a duty to protect citizens, I think people also have a right to gain or lose money if they wish. The government’s role in such a case is to ensure that should losses be caused by criminal activity; the responsible syndicate is brought to book. A better way would be to get the economy working so people would not see any need to risk their money. Nevertheless, it’s a free world. The conservative, principled man next-door may just be a closet MMM participant. Long live MMM!

Image Credit: phil-mmm.blogspot.co.uk


  1. I am not a MMM participant, despite the best efforts of people close to me to convince me to join. Let me manage my few kobo without fear. 
  2. Feel free to contact me if you need clarification about the model, or want to criticize the model.

[Update: 20 November 2016]
The workbook has been updated with an extra sheet covering a “fraud scenario”. From this simulation, using the aforementioned parameters, even with just 0.5% of the available funds being removed each month (using henchmen), MMM does not survive beyond 36 months.

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