what way does MMM and other ponzi schemes affect the banks and financial houses?
1. Banks actually used to pay high interest rates of up to 30 percent and even more for investment banks as late as in the 60's, 70's, and even 1980's in some countries and Nigeria until lazy, greedy, and fraudulent bankers and opportunistic politicians came into the financial scene such that banks now collect depositors' monies at 3percent interest rate return to the owner which is spread over 12months and further subject to withholding tax and value added tax(VAT), leaving the investor with less than 2500Naira for say a hundred thousand on fixed deposit whereas the same banks lends to businesses at 27percent in addition to a further 3 percent real interest rate plus inflation adjustments. The banks sometimes make over one thousand percent of the money they get from depositors within days via foreign exchange, round tripping, express loans, underhand dealings, stocks, and traditional lending aside other covert means of making money. Lest tell ourselves the truth. Is this fair? Isn't this enough to drive investors especially struggling youths towards something that promises them a better life in spite of the possible risks?
The MMM I learnt uses a kind of mathematical model whose algorithm is a fusion of the existing interest accruing gradient at 30percent and the Fibonacci number system (like Pascal triangle) which makes it more lucid with minimized risks hence moving it steps ahead more conservative in nature than the usual bogus ponzi schemes. I even heard there's is now one ultimate cycler that yields a whopping 75 percent return after 4 days. Goodness gracious!
2. In truth, the banks can come up with investment models that can pay up to 15 percent return monthly or quarterly especially with ICT enhanced banking that doesn't need the overhead costs of staffs and massive edifices or infrastructures and other sources of overhead cost like MMM does which will be enough to send MMM and Co packing out of the country but it will expose their unhealthy dealings and give less room for them to accumulate excesses like they presently do.
3. MMM make their monies from Google and other platforms by bringing traffics to them using their platforms and operating systems aside window financial operations. In fact, the only problem MMM has from the way I am seeing it is in their not registering as a formal financial institution and paying tax. Once they do that I believe the Nigerian government will let them be. After all, security in Nigeria is just a word! The banks incur cost from the maintenance of massive facilities, staffs, high maintenance lifestyles, sky scrapper head offices in Marina, and tax aside other dealings. MMM have no staffs, offices, or physical presence but promoters who work in collaboration online.
4. Talking about risks of collapse, Nigerians don't seem to fear risk taking as such haven seen the likes of wonder banks, the stock exchange, and the banking sectors collapse with billions lost in the past. Nigerians have nine lives financially. They have met bigger devils. No shaking!
My take is that while I may not do MMM, I wouldn't join in condemning it neither do I advise any one to join it. I see MMM as something that can be morphed into a kind of New Age Investment Banking that can still be statutory and risk free. The owners of MMM and the banks should think about this deeply and get their mathematicians to design a workable model that will make banking exciting again without the attraction for ponzi schemes and the attendant consequences. Times have changed and the way we do businesses must reflect the age we are in. The economy is now too hostile for the present order.
The investment banks should see MMM as a challenge rather than a threat and go back to the drawing boards to cook something creatively delicious for the investing public to get excited with the financial sector again.
Written by Christian Okwori
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