Has MMM, the popular Peer to Peer platform crashed?
I think not, but this is the beginning of the end.
Like any pyramid scheme, MMM depends on new money to pay old money. However in Nigeria, during Christmas everybody needs cash, its a time of spending and consumption, not investment.
Many new “depositors” in the MMM scheme, invested during the year with the sole intention to earn “30%” , withdraw in December in time for Christmas and School fees. Every financial institution in Nigeria will see more withdrawals than deposits in December. MMM knew this, thus they offered a “Holiday Bonus of 20%” until January 1st 2017. in effect they were offering incentives to new “depositors”, to boost cash flow.
However MMM is unique, its promises 30% addition, but has no central account, fund or reserves. All “withdrawals” are funded by new “deposits”. The problem now is that demand for cash is so high the system cannot not cope, thus a temporary freeze, which is a practical but clearly unsmart solution. MMM had effectively sowed doubt, and it will now find it harder to get new “depositors”…
Will MMM crash? yes eventually it will, the mathematics of 30% a month confirm it will…but for now its wounded….not dead
What is key is what will happen after the “great freeze” is over…will new “depositors” flow in? if they do, MMM survives.
Our advise remains the same, this is not an investment, and it should not be considered an investment. Its gambling, it’s a gamble that should the participants want to exit, there will be new participant to take them out….