CBN Warns Nigerians Against MMM, Calls It “Wonder Bank”

The Central Bank of Nigeria (CBN) has warned Nigerians to be careful of any deposit money institution that is not insured by the Nigeria Deposit Insurance Corporation (NDIC) especially the trending MMM Nigeria community.
The bank through its the acting Director of Corporate Communications, Mr. Isaac Okoroafor, made this known yesterday against the proliferation of wonder banks in the country in recent times.
Okoroafor said such deposit money institutions were dubious present Ponzi schemes.
“At times like this when the economy has suffered some decline, Nigerians should be very careful with those they deal with. Any institution that is not licensed by the CBN to accept deposits should not be given money to keep under any guise,” he advised.
He warned Nigerians to beware of the so-called wonder banks, explaining that they were makeshift institutions to dupe people.
“We can vouch for the banking system. The deposit money banks are the only licensed institutions to take deposits. If you need to deposit money in any form, go to any of the deposit money banks and put your money, you can buy fixed income instruments or invest in stocks,” he said.
Okoroafor said the CBN could not guarantee the unregistered institutions, insisting that when depositors lose money to them, the bank would not be able to help them.
“These people always come with very interesting propositions. These are fraudsters who are just out there to collect people’s money and run away as soon as they hit their target. There is no insurance because the NDIC does not even protect them against such risks when they occur,” the CBN said.
He said the CBN was intensifying efforts and liaising with the various security agencies to identify the promoters of these schemes and have such persons arrested and prosecuted, adding that anyone caught with them would also be made to face the law.
Promoters of wonder banks and other pyramid schemes in the country are currently taking advantage of the rising level of unemployment as well as the shrinking disposable income to attract unsuspecting prey.
From Lagos to Port Harcourt and some other big cities in the country, owners of these illegal businesses have been offering Nigerians mouth-watering interest rates, which cannot be found in the banking system, in a bid to attract large number of customers before they run away with huge cash.
For instance, at the Ojuelegba area of Lagos, THISDAY was recently given a small handbill advertising investment schemes that offers 30 per cent returns in 30 days.
Also, there is a new Ponzi scheme called ‘MMM’ that is spreading like wildfire. A lot of young school leavers have already signed on to this scheme, which the promoters are marketing as a “mutual fund.”
“MMM offers its participants 30 per cent growth rate per month for each and every donation they make into the system… MMM belongs to the community, its sustainability depends on the activities of the people that make up the MMM Nigeria community, that is me and you and other MMM Nigeria participants,” the promoters wrote in an online advertisement.
Typically, what promoters of such pyramid scheme do is that they offer rates far beyond what is obtainable in commercial banks. This would always attract a lot of people who would always rush in to stake their funds. But, those who join the scheme late would always be the ones to lose their shirts as they would have been convinced by those that joined earlier to invest huge amounts of money.
But experts have warned against falling for the bait of illegal deposit-taking institutions which are not licensed by the CBN, saying that their only intention is to defraud members of the public.
Recall that with the Nigerian economy is in recession, the National Bureau of Statistics (NBS) recently revealed that the country’s gross domestic product (GDP) contracted by 2.06 per cent in the second quarter of 2016, compared to the negative growth of 0.36 per cent recorded in the first quarter of 2016.
Also, national unemployment rate also rose to 13.3 per cent in the second quarter of 2016, from 12.1 in the first quarter of 2016.