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How Diaspora Bonds Work and Benefits

Sometimes in 2017, Nigeria’s Former Finance Minister, Kemi Adeosun revealed the Federal Governments (FG) plans to launch a $300 million diaspora bond bid in March 2017. I knew a lot of people were confused. And, in order to help esteemed Nairametrics‘ readers, I took out time to develop this article. So what is a diaspora bond and how can you invest?

A diaspora bond is basically a government debt that is targeted but not limited to the nationals of the country that are living abroad. The idea is based on a presumption that because of emotional ties to their country of origin, expatriates may find investing in such products worthwhile, especially if they are financing development projects like infrastructure.

According to World Bank Migration and Remittances Fact-sheet 2016, 247 million people, or 3.4% of the world population live outside their country of birth. In 2015, $581.6 billion was remitted, of that figure, $431.6 billion went to developing countries. In the same year, Nigeria was the highest remittance receiving country in Africa and 6th highest in the world, receiving $20.8 billion. In 2018, the figure jumped to $25 billion, to remain Africa’s highest.

NIGERIA REMITTANCE 2015, 2016, 2017, 2018

Nigeria’s Senior Special Assistant (SSA) on Foreign Affairs and Diaspora said that in 2016 Nigeria recorded a massive increase receiving a total of $35 billion in remittances.

Most of the remittances are informal, meant for family and friends. Diaspora bonds provide the government with an opportunity to tap into the wealth of their diaspora community to fund national level development. In other words, governments can tap into capital markets beyond foreign direct investment, foreign investors and conventional loans to finance development.

This is particularly important during periods of economic downturns when other lenders may be reluctant. Policy makers, however, should not assume that this is a quick and easy way to raise capital. Many countries have launched bids but with varying levels of success. Israel and India have been the most successful till date, although both set up bonds for different purposes and in different ways.


Israel has issued diaspora bonds by the Development Corporation for Israel (DCI) since 1951 raising a total of $32.4 billion as at 2015. The bond was set up to finance development projects in various industries including energy and transport. On the other hand, India set up its bond to support their balance of payments and it has done this three times Indian Development Bonds in 1991 ($1.6 billion), Resurgent Indian Bonds in 1998 ($4.2 billion) and Indian Millennium Deposits in 2000 ($5.5) raising a total of $11.3 billion.

The bond issued by the DCI was listed with the Securities and Exchange Commission (SEC) and thus, it was open to foreign nationals as well as the Diaspora of Israeli origin. Whereas India’s bonds were issued strictly to the Diaspora of Indian origin and were not listed in the SEC.

Israel-Diaspora Bonds were fixed, floating rate bonds with maturity periods ranging from one to twenty years and bullet repayment, with large financial incentives including making its interest rate slightly higher than US Treasury bills.

To make the bonds more accessible, the DCI set up retail agencies in the US and other countries. India, on the other hand, chose fixed rate bonds with five-year maturity and a bullet maturity. As financial incentives, the bonds were two percent higher than US Treasury bills and were exempt from Indian income and wealth tax.

The problem with Diaspora bonds

However, African countries like Ethiopia have had limited success. Its first bid the Millennium Corporate bid to finance a hydro-electric dam in 2008 was unsuccessful because take-up was low. Experts have opined that lack of trust of repayment were the key issues that deterred potential buyers.

[ALSO READ: A legal view of corporate taxation in Nigeria]


Against the backdrop of falling oil prices and the loss of value of the naira, the diaspora bond bid may be a good alternative for Nigeria to raise much-needed funds to finance the huge infrastructure deficit. However, foreign investors exited the Nigerian market in 2015 because of unclear economic policies and lack of trust in the government financial management.

So the question is how well will the FG communicate with the Nigerian diaspora community to build enough trust so that people can invest in the bond? To tackle some of these issues, the FG has said the Debt Management Office will manage the bond.


Using the March 2017 $300 million diaspora bond bid to illustrate the benefits derivable from Diaspora Bonds. While enumerating the returns on the bonds, the SSA on Foreign Affairs and Diaspora Mrs Abike Dabiri noted that the bonds will have at least five to ten-year maturity and annual dividends between five to eight percent, which is higher than bank deposit which is within two percent.

As further financial incentives the Director General of the DMO, Dr Abraham Nwankwo said that the bonds are exempt from tax, could be used as collateral from borrowing from banks and discounts on the FG housing scheme.

Read what each Nigerian State is Owing, the Biggest and Least Debtors

Lagos State, Nigeria’s richest state remains also its biggest debtor, accumulating as at March this year N542 billion in domestic debt.

Figures published by the Debt Management Office on Wednesday showed Rivers and Delta state, both oil rich states, in a photo finish for the second position.

Rivers has Nigeria’s second biggest domestic debt figure with N225.6 billion. It is followed by Delta with N223.4 billion.

Akwa Ibom, also an oil state, has the fourth biggest debt profile at N199.7 billion. It is followed by Cross River with N167.2 billion.

Federal Capital Territory, which depends on funds from the Federal Government is sixth with N163.5 billion. Osun has a debt burden of N147 billion, Bayelsa N133.3 billion, Kano N121.3 billion and Ekiti N118 billion.

The least indebted state in Nigeria is Yobe with N26.9 billion.

Debts by states of Nigeria

Source: pmnewsnigeria

CBN Change in Customs Duty Exchange Rate will Exacerbate Challenges Faced by Investors — LCCI

The Lagos Chamber of Commerce and Industry, LCCI, has said that the Central Bank of Nigeria (CBN) change in Customs duty exchange will exacerbate the challenges faced by investors and the citizens in the economy.

The President of LCCI, Mr Babatunde Ruwase noted that three weeks ago, the exchange rate for the computation of import duty was reviewed from N306/ dollar to N326/dollar. “This was purportedly done at the instance of the CBN. The worry here is that this action by the CBN will exacerbate the challenges faced by investors and the citizens in the economy. What the CBN has done is to impose another form of tax on investors and citizens.

According to him, coming at a time when the government has repeatedly stressed its commitment to the investment growth and economic diversification, this policy action is a negation of what the present administration professes as far as economic management is concerned. Investors are currently grappling with a difficult operating environment manifesting in the high infrastructure deficit, weak purchasing power, increasing poverty incidence, high unemployment and fragile economic growth.

“This is not a time to introduce a policy measure that would impose an additional cost on investors. Already the sharp depreciation in the exchange rate in the last few years had resulted in high import duty across all sectors, including duties on raw materials and intermediate products used in the industries.”


“The CBN in its five-year plan presented recently by the CBN Governor also underlined the imperative of growth, investment promotion and job creation.

This recent exchange rate review for import duty is not consistent with the aspirations of the CBN as contained in that plan. The loss to the economy and the welfare cost to citizens will certainly outweigh the revenue gains to the government.

Excessive focus on revenue drive could undermine the realization of the objectives of the ERGP, especially from an investment and poverty reduction perspective” he said. He noted that some of the implications of the exchange rate review are High cost of raw materials for manufacturers, Inflationary pressure on products and services across sectors, Erosion of profit margins for investors, Negative welfare effect on citizens as general price level increases, Capacity of businesses to create jobs is weakened and Weaker purchasing power of citizens leading to higher poverty incidence.

“On account of the foregoing adverse implications for the Nigerian economy and the welfare of citizens, we call for an immediate reversal of the exchange rate increase for the purpose of computation of import duty” he stated.

Source: vanguardngr

Without Economic Growth, Democracy is a Myth

Remittance of Nigerians living abroad was $22 billion in 2017. In 2018, the same remittance saw a 14 percent growth to $25 billion. This is 7 times the size of foreign aid ($3.359 billion) to Nigeria.

The $25 billion remittances represent 6.1 percent of the country’s Gross Domestic Product (GDP) while the Foreign Direct Investment (FDI) was $2.200 billion.

“PricewaterhouseCoopers, PWC, noted that the amount translates to 83 percent of the federal government’s budget in 2018 and 11 times the Foreign Direct Investment (FDI) during the same period.”

With an average remittance fee of 6%, Nigerian generated US$ 1.5 billion in fees for the money

transfer corporations. A fraction of this in the form of investment will boost our economy and lead to better governing. The $1.5 billion is almost 70% of the Foreign Direct Investment. Nigerians in Diaspora can assist in turning the country into a self-sufficient economy without the need and dependency on hand out (foreign aid).

Remittances are an important share of foreign reserves for countries, but their impact on development

and economic growth is minimal if they are only spent on consumption. The remittances have done the right thing by first, giving the person a fish and banishing their hunger; the next step is to teach them to fish.

If every Nigerian in the diaspora with the means to remit average of $300.00 a year contributes/invests twenty dollars (the remittance fee) or just 1% – 2% of the $1.5 billion and pool their own resources, the country could move from charity case to wealth creator. The benefits of this minimum investment would be profound.

Africans must lift themselves up by their bootstraps and move from charity case to wealth creator. But to achieve this shift, Nigerians must think like Investors/Entrepreneurs.

In his 2006 book, The White Man’s Burden, William Easterly estimated that between 1956 and 2006 more than $2.3 trillion in aid flowed to Africa. We cannot and must not be content with being fed fish we must learn or teach ourselves to fish.

“The aid business is the only industry in which if it’s done right the people fire themselves. Who is going to do that?” “They have people who have never been in business, never built a business, never sold a thing in their lives — these are the people who are now supposed to come and help poor farmers write a business plan for growing something and selling it.” – Magatte Wade

If you agree with the above quotes, why then are you trying to duplicate it?

Aid and foreign donations including remittances are top-down approaches. The authorities (the donors) treat recipients as passive beneficiaries of aid rather than as active participants in the process; they tell people what they need rather than think to ask what is needed or required.

We are suggesting an investment platform that is a bottom-up /participatory action in contrast to top-down approaches. Participatory action involves collaboration across all stages of the program, from identifying the issues of concern, designing, and implementing the mutually-agreed upon changes.

With your minimum of $20.00 investment, you become a co-owner in the corporation. You can suggest and contribute ideas and programs needed/required in your state, town, local government or village. Implementation will be based on needs and economic viability. This is not an aid organization this is a business enterprise.

Entrepreneurs are the key to a prosperous nation. Nigerians do not need to wait for the world to come to our rescue. We have the resources, capacity and the capability we need right here at home to develop our nation. After so many decades of dependence on foreign funding, it is time that wealth and not poverty dictates how our country develops. By our own bootstraps, Economic Opportunity & the Dynamics Income Distribution is attainable.

Our mission is to utilize these private contributions (US$20.00 minimum) and develop an Equity Firm into a large scale investment firm that develops and expands economically viable businesses that will provide dividend income, capital appreciation, and interest income to the investors.

With the contribution of 6.1 percent of the country’s Gross Domestic Product (GDP) and the equivalent of”83 percent of the federal government’s budget in 2018”, Nigerians in the diaspora already has the economic strength. All that is missing is the political strength.

Once the Nigerians in the diaspora are able to cast their votes in all elections, they will/can easily secure/obtain the political strength. To have a firm political strength, the economic strength must be strongly rooted hence the proposed minimum investment as the beginning.

Source: thenigerianvoice

Nigeria’s Total Debt Stock Rises to N24.9 Trillion

Nigeria’s total debt stock rose to N24.9 trillion (US$81.2 billion) as of the end of March 2019. This is revealed in the latest report released on Wednesday by the Debt Management Office (DMO).

According to the latest report released by DMO, Nigeria’s total debt portfolio hits N24.9 trillion as of March 31, 2019, compared to N24.3 trillion in December 2018. That is, quarter on quarter, Nigeria’s total debt stock rose by 2.3% or N560 billion.

Breakdown of debt stock: Nigeria’s debt stock category for the first quarter of 2019 shows that the country’s total external debt is estimated at N7.8 trillion (US$25.6 billion), constituting 31.5% of total debt for Federal government, Stated and the FCT.

  • The total domestic debt rose to N17 trillion (US$55.6 billion) or 68% of total debt stock within the quarter.
  • The Federal government’s domestic debt was put at N13.1 trillion or US$42.7 billion
  • All the 36 states accrued domestic debt of N3.97 trillion or US$12.9 billion as of the end of March.

States’ debt stock hits N3.97 trillion: A Further look into the breakdown of debts accruable to states in Nigeria revealed that states’ debt profile increased by 3% within the last quarter.

Specifically, as of December 2018, total debt accruable to states was estimated at N3.85 trillion, while the figure rose to N3.97 trillion in March 2019.


Analysis of the data shows that Lagos State posted the highest debt stock as of March 2018 with a whopping N542.2 billion. Other states that make up the top 10 highest indebted states in Nigeria include;

  • Rivers – N225.5 billion
  • Delta – 223.4 billion
  • Akwa Ibom – N199.7 billion
  • Cross River – N167.2 billion
  • FCT – N163.5 billion
  • Osun – N147.7 billion
  • Bayelsa – N133.3 billion
  • Kano – N121.7 billion
  • Ekiti – N118 billion

Debt stock

States are in debt trap: It is no longer news that close to 30 states in Nigeria have been described as insolvent. Recall that the federal government dished out bailout funds to assist almost 30 states in the past year to pay up workers’ salaries at respective states.

While the federal government has come out to indicate no more bail-out to states governments, trouble may soon unravel as the organized Labour Union is bent on the implementation of the new N30,000 minimum wage from states whose revenue sources have plunged over time with rising debt.

Fresh concerns about Nigeria’s rising Debt: In recent months, Nigeria’s debt has gained wide criticisms both within the domestic and international spheres. For instance;

  •  The African Development Bank (AfBD) recently revealed that Nigeria spends more than 50% of its revenue on debt servicing.
  • The World Bank has claimed Nigeria’s debt is not sustainable
  • The former Central Bank of Nigeria’s Governor, Sanusi Lamido, recently declared that Nigeria is “bankrupt and the country is heading to bankruptcy”
  • With Nigeria’s rising debt closing down on N30 trillion mark, the calls for fresh concerns in the country.

Source: nairametrics

Profitability of Nigerian Banks Under Threat—Fitch

Earlier this month, the Central Bank of Nigeria (CBN) directed deposit money banks operating in the country to ensure 60 percent of their deposits are offered as loans to customers or risk severe punishment.

The apex bank had explained that it was taking this step in order to propel the nation’s economy through lending to small business owners as lenders were in the habit of using their deposits to mop up government securities to boost their profits.

In 2016, Nigeria slipped into recession, which affected almost every parts of the economy except the banking sector, which churned out huge profits during the economic downturn, which lasted almost a year.

Though the Africa’s largest economy is out of recession, it is still struggling to regain full recovery and in order to make this happen, the CBN said banks have till September 2019 to raise their loan to deposit ratio to 60 percent or would have to deposit extra unremunerated cash reserves, equal to 50 percent of their lending shortfall, at the central bank.

Reacting to this new development, renowned global rating agency, Fitch Ratings, said this new requirement could have an adverse effect on the profitability of Nigerian banks.

In a report obtained by Business Post, Fitch said it would be credit-negative for the banking sector, because it would push some banks to significantly increase lending to riskier borrowers, potentially with looser underwriting or underpricing of risk.

“Achieving the new LDR requirement in such a short timescale will be very difficult for some banks given their lending levels, particularly if customer deposits continue to grow at present rates. The sector’s overall LDR was 57 percent at end-May, according to CBN data. This is low relative to many markets, and reflects banks’ concern about the risk to asset quality from Nigeria’s often volatile operating environment. Nigeria’s largest banks, with the exception of Access Bank, have LDRs below or close to 60 percent and will be among the most affected by the new requirement,” the rating firm noted.

According to Fitch, “It is unlikely that there is sufficient demand from good-quality borrowers for banks to meet the target without relaxing their underwriting or pricing standards. Banks continue to struggle with high impaired and other problem loans, which is partly the cause for muted lending since 2016. The present operating conditions are not conducive to loan growth, and rapid lending during the fragile economic recovery could increase asset-quality problems in the future.

“Chasing loan growth could also weaken banks’ profitability if they cut margins to attract customers, and because of the need to set aside expected credit loss provisions under IFRS 9 when loans are originated,” it posited.

The CBN is incentivising banks to focus on SME, retail, mortgage and consumer lending in particular, by assigning a weight of 150 percent to these segments when computing banks’ LDRs for the 60 percent target. The SME and retail segments tend to be riskier for banks, and Nigeria’s mortgage market is in its infancy.

It said despite the difficulty of sourcing rapid loan growth and the risks it entails, “We expect banks to make a big effort to achieve the 60 percent target given the severity of the penalty for missing it. Depositing cash at the central bank is highly unattractive for banks as they receive no interest on it, in stark contrast to the high yields they can earn by holding Nigerian T-bills and government bonds.

“We will monitor how lending develops in 3Q19 at the sector level and at individual banks. Fast loan growth, particularly relative to the market average, or other signs that a bank’s risk profile may be deteriorating, could lead to negative ratings actions.

“Asset quality and capitalisation are key rating sensitivities for Nigerian banks, and could deteriorate as a result of fast loan growth. Most Nigerian banks’ Issuer Default Ratings are constrained by the country’s operating environment and ‘B+’/Stable sovereign rating.

Source: Business Post Ng

Bank stocks sell-off on CBN’s lending order may be overdone

Bank stocks have been selling off since the Central Bank of Nigeria (CBN) announced plans to force commercial banks to maintain a loan to deposit ratio (LDR) of 60 percent, or effectively lend at least 60 percent of their deposits to customers.

Investors, spooked by the potential downside of the July 3 order by the CBN, have largely sold some of the country’s largest banks.

The big lenders are down by an average of 2.19 percent since July 3.

Guaranty Trust Bank has been the biggest loser, after sliding by as much as 6.7 percent since July 3. First Bank follows with a 2.4 percent decline. United Bank for Africa (UBA) and Zenith bank are down 1.64 percent and 0.26 percent respectively.

Access Bank however has been unfazed by the new regulation.

Investors are interpreting the regulation by the CBN as negative for the banks and that has fuelled the sell-off.

Investors are well aware that there is a risk that the new regulation could lead to banks underwriting high-risk loans which could lead to further asset quality deterioration and destabilisation of the industry, at a time when the regulator has limited scope for further bail-outs.

However, Ronak Ghadia, Director of Sub-Saharan African Banks, at EFG Hermes research points out that based on conversation with the management team of some the banks, the LDR will be calculated using gross loans and not net loans as indicated earlier.

On this basis, the impact of the regulation will be even less than earlier estimates.

Access, FBNH and Zenith’s LDR ratios were already above 60 percent as at the First Quarter (Q1) of 2019, while GTB and Stanbic’s (Q1) 2019 LDRs were moderately below the threshold.

“UBA is the only bank with an LDR significantly below the regulatory threshold. Likewise, GTB and Stanbic would have to grow their loan book by a modest 1.5 percent and 0.5 percent respectively to meet the 60 percent LDR threshold while UBA would have to increase its credit portfolio by 8.8 percent, hefty but manageable,” Ghadia said in a July 9 note to clients.

On the upside, the sell-off could also serve as opportunities for bargain hunters to take advantage of the low price of bank stocks and take positions.


Nigeria attracted $7bn deals from African Investment Forum — AfDB

Nigeria accounted for $7bn of the $38.7bn inflows that were secured for the African continent at the maiden edition of the African Investment Forum, which held in South Africa in November 2018, the African Development Bank has said.

The Senior Country Director for Nigeria at AfDB, Mr Ebrima Faal, disclosed this in Abuja on Tuesday at a roadshow to promote the second edition of the forum coming up in South Africa in November.

He disclosed that the AfDB would be increasing its average investment in Africa from about $600m every year to about $1bn per annum in the next three years.

Faal said that transactions at the forum that were designated for Nigeria accounted for 14.9 per cent of the deals that were closed at the investment market, which the bank conceived to expose bankable projects on the continent to investors from across the globe.

He said, “The Africa Investment Forum aims to change the face of investment in Africa by bringing together members with a vested interest in Africa’s growth and development through business transformation.

“It is a multi-stakeholder and multi-disciplinary collaborative platform for international business and social impact investors looking to invest on the continent. It is a highly-transactional marketplace dedicated to advancing projects to bankable stages, raising capital, and accelerating the financial closure of deals.


“Sufficient to say now that it convened over 2,000 participants representing 87 countries, including eight heads of governments in 2018. Deals worth a total of $46.9bn were discussed with 49 deals valued at $38.7bn secured.”

The AfDB boss added, “At the 2018 Africa Investment Forum, West Africa accounted for 36 per cent of the deals that were closed. Nineteen projects worth $16.1bn were presented, of which 16 projects valued at $13.1bn secured investment. Our region grossed the highest value in deals, followed by the host region accounting for 22.7 per cent.

“Nigeria was very visible. Out of the 63 boardroom deals presented at the forum, Nigeria had five deals worth $7bn. This represents 14.9 per cent of the total deals accounted for the continent, and 43 per cent of the deals accounted for the region; we can do better.

“This year, it is paramount that we not only maintain our place as a pacesetter but also collectively strive to improve on the quality and quantity of deals closed.”

Faal said that the Africa Investment Forum offered a unique opportunity to exhaust numerous options for sound, innovative and economically viable growth for the continent and especially for Nigeria.

According to him, even with gross international reserves of about $45bn and a pension fund of about N8tn, Nigeria will need a considerable amount of private finance to bridge its cumulative infrastructural needs of about $3tn by 2024.


He added that Africa continued to demonstrate economic resilience with an expected Gross Domestic Product growth of four per cent in 2019, signifying growth above expectation.

Faal said that the signing of the African Continental Free Trade Agreement by President Muhammadu Buhari had now made Africa the largest market in the world in terms of value and numbers.

Africa’s 2 Largest Economies Diverge on Central Bank Policy

Central bankers in Africa’s two largest economies are taking diverging policy stances, even as they get slammed by similar headwinds of low growth and high unemployment.

While Nigeria seems to be combining monetary policy with a developmental bent similar to fiscal policy, South Africa just made a fresh vow to erect an impenetrable wall between the two to ensure they never collide.

The South African Reserve Bank and finance ministry issued a joint statement Thursday where both institutions vowed to respect each other’s independence.

The Reserve Bank will focus on the primary mandate of any central bank and steer clear of interfering with fiscal policy matters while the finance ministry will not meddle in areas of monetary policy.

The South African arrangement which shares similarities with the structures in place in developed economies has little semblance with the arrangement in neighbouring Nigeria.

In Nigeria, the central bank is gradually taking the role of a de facto development bank that is stimulating economic growth and employment.

“Central banks can occasionally provide support for fiscal authorities but this should not be seen as the norm,” a research head at a Lagos-based pension fund who pleaded anonymity told BusinessDay. “In our case, it has gone on for four straight years and shows no sign of slowing.”

The source said that the CBN runs the risk of becoming an extension of the Federal Government.

“The problem is the Senate has not tried to plug that gap. How much is the CBN lending to the FG? The Senate should be auditing the number every year because the CBN would have to curtail the pressure it is facing,” the person said.

But the Central Bank of Nigeria’s new burden has been borne out of necessity, Johnson Chukwu, founder and CEO of Cowry Asset Management Limited, posited.

“The reason we are seeing this in the Nigerian economy is that the fiscal authorities have been relatively silent and nature abhors vacuum,” Chukwu said.

He explained that although the resources of the monetary authorities are being stretched, the availability of a finance minister active on carrying out the fiscal mandate would allow the CBN return to its core function.

The apex bank has since 2014 devoted itself to programmes such as the Anchor Borrowers’ Programme, Real Sector Support Facility (RSSF), Electricity Market Stabilisation Facility, Creative Industry Financing Initiative and several others.

The bank regulator, which has become more intent on interventions in key sectors to grow the economy, facilitate job-creation, and create credit, says the pursuit has been in a bid to “ensure that the CBN is more people focused”. Godwin Emefiele, CBN governor, said this in June while outlining the apex bank’s policy thrust over his second term.

The central bank would still remain committed to the same over the next five years. But the situation though with its perks is not without downsides.

Experts warned that central bank’s development mandate could crowd out the real sector.

“What happens is there is distortion in the market when the CBN has to lend at single digit to certain sectors while official interest rate is at double digit to curb inflation,” a BusinessDay source said.

The central bank last Thursday released the guideline on regulatory measures to improve lending to the real sector of the Nigerian economy. The policy mandates all Deposit Money Banks to maintain a minimum Loan to Deposit Ratio (LDR) of 60 percent by September 30, 2019.

The bank said it would penalise non-compliance with a levy of additional Cash Reserve Requirement (CRR) of up to 50 percent of the lending shortfall of the target LDR.

Although the policy aims at boosting real sector growth by making credit available to businesses, experts fear the unintended consequences of increasing banks’ bad loan books as infrastructural challenges which have been a drag on company performance remain.

Source: businessdayng

Over 100,000 Nigerians Re-Enter MMM Ponzi Scheme as Poverty Bites

Mavrodi Mondial Moneybox (MMM) Cooperation, the Russian Ponzi scheme that had many Nigerians’ monies trapped about two and a half years ago, is back.

The financial pyramid scheme reopened its operation in Nigeria in the past six months, according to BusinessDay findings, and participants are being offered between 30 percent and 50 percent returns per month. The administrators said their “goal is to destroy the world’s unjust financial system”.

MMM Cooperation is a Ponzi scheme because it lures participants and pays high returns to earlier participants with funds from more recent participants. The scheme leads greedy victims to believe that returns are coming from other means, and they remain unaware that other participants are the source of funds.

This is coming at a time many Nigerians are reeling in extreme poverty. The pyramid scheme targets mostly poor Nigerians as well as middle-income earners who have the get-rich-quick instinct.

About 91.16 million Nigerians were living in extreme poverty as of February 13, 2019, according to the World Poverty Clock, created by Vienna-based World Data Lab.

The World Bank classifies a person to be living in extreme poverty if he/she lives below the poverty line of $1.90, which translates to N693.5 per day.

Over 100,000 Nigerians have keenly reentered the MMM scheme as at the first-half (H1) of 2019. Most of the participants are staking up to a maximum limit of N2.5 million and a minimum of N1,000.

In MMM, participants see themselves “as a community of ordinary people, selflessly helping each other”, or a “kind of the Global Fund of mutual aid”.

How does this Ponzi scheme work? Participants declare their willingness to ‘Give Help’ and ‘Provide Help’. After that their account will be credited with so-called Mavro (internal currency of the system). The said Mavro’s amount will start to grow from the moment of deposit.

“The rate of growth can be slowly or rapidly, everything depends on you and your activity only. Calculation of growth occurs every day. The said sum in Mavro shows how much money the participants earn,” the Ponzi scheme said on its website.

“This is the first sprout of something new in the modern soulless and ruthless world of greed and hard cash. The goal here is not the money. The goal is to destroy the world’s unjust financial system. Financial Apocalypse! Before you join, be sure to be acquainted with our ideology,” it said.

In a warning statement on its official website, the scheme said, “MMM is not a bank, MMM does not collect your money, MMM is not an online business, high-yield investment programme (HYIP), investment or Multi-Level Marketing (MLM) programme. MMM is a community where people help each other.”

MMM said it gives “a technical basic programme, which helps millions of participants worldwide to find those who need help, and those who are ready to provide help for free”.

“All transferred Bitcoins to another participant are your help given by your own goodwill to another one, absolutely gratis. If you are completely confident and certain in your actions and make your mind to participate, we kindly ask you to study carefully all warnings and instructions first. In cases of any matter regarding the topic our online consultants are ready to help and answer all your questions,” it added.

In 2016, Christmas and New Year celebrations went sour for more than 3 million Nigerians who participated in the popular MMM Ponzi scheme as the promoters of the scheme suspended new payouts to subscribers.

The Lagos Emergency Management Agency (LASEMA) had then issued suicide prevention notice and advised Lagos residents to dial 112 if anyone attempted suicide due to the MMM crash.

The Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN) had also warned Nigerians about the MMM scheme. The House of Representatives, besides issuing a warning, had also ordered an investigation into the operation of the MMM scheme.

The administrators of MMM Cooperation in a June 26 note to the “friends of MMM family” seen by BusinessDay simply said, “It is past 6 months, and would like to thank all the participants of this family. Everything is going perfectly well, our system is safer every day, because the support of the participants cross all world borders.”

The message to the friends of MMM family further said that donations could be made “in your local currency, and also in crypto-coins (BTC, LTC, ETH)”.

“Actively participate in MMM and receive a high value over your aid. Never forget to do good deeds, help those who need it. You can change the colour of the world with kindness and love,” it said.

In March 2018, the founder of the MMM series of financial pyramid schemes, Sergei Mavrodi, died in Moscow. The former deputy of the Russian Duma (State Assembly) and one of the most prominent fraudsters in Russia’s modern history was 63 years old.

“This system will not end, it’s still the beginning. We are together fulfilling the desires of our deceased friend Sergey Mavrodi. I invite everyone to celebrate this half year together, and let everyone know that our first full year is approaching. The MMM Cooperation has already shown that it is a fair and honest system where the true ideology of mutual aid is applied,” MMM said in a recent statement.

“We are all welcome to the biggest help system, always have the great guiders, always have this administration, because it is honest and so, the success belongs to all of us,” it said.

MMM had ahead of its re-launch introduced Bitcoin, the popular crypto-currency, as part of its mode of payment.

MMM said it only regulates the process and nothing more, adding that all the money is distributed between the participants themselves through thousands and millions of accounts.

“The system completely belongs to people. Without fools! It is a real mutual aid fund, where ordinary people help each other. There is no central account, where all the money flows to (and where it can be easily stolen from. Participants transfer BITCOINS directly to each other, without intermediaries!” it stated.

Source: BusinessdayNg

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