It is true to say that any individual who is reasonable knows that Ponzi schemes are sure to collapse but it eludes the human mind the reason why more than most continue to fall prey to these outrageous unorthodoxies which are baseless and would never make sense.

“A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources. Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent.”

“A pyramid scheme is an illegal investment scam based on a hierarchical setup. New recruits make up the base of the pyramid and provide the funding, or so-called returns,which the earlier investors/recruits above them receive. A pyramid scheme does not involve the selling of products. Rather, it relies on the constant inflow of money from additional investors that works its way to the top of the pyramid.”

Many people were left counting their losses after joining these pyramid schemes. Any time you see or hear someone telling you that they can make you rich but do not reveal the details or the how it shall be, then move away. Its free advice, take it. Success does not happen by happenstance and sudden unguided desires to be rich. A solid transaction that is sustainable has to go on somewhere. No company will exist just for the sake of helping you and giving you money. It is not feasible. “See then that you walk circumspectly, not as fools but wise, redeeming the times for the days are evil. Therefore do not be unwise”. That is the Bible’s take on wisdom. My advice is DO NOT DO WHAT IS FOOLISH.

The over night prosperity wave has left many becoming greedy and falling prey to these schemes. People do not want to work and to be innovative. They want a life altering miracle to happen in their lives instantly, in this day and age where people do not want to go through process but just want the results. Learn from the mushroom which grows overnight but is quickly plucked out by day. The mushroom fails because it has grown without being strengthened by time. The gum tree takes years to grow and establish roots but when it stands tall it is never to again to fall. We need to learn as a nation the importance of delayed gratification otherwise we continue to fall prey to get rich quick schemes that are stupid and a non start. The perpetrators of these schemes fly on the desperation of the people and feed from the desperate need to succeed beyond means.  It is important to realize that success comes in bits and fits of minute disciplined progress. Never invest in a business where you do not see where the profits are coming from.

In January 2017, a man known as Owen Machamu came up with a scheme that he claimed was to fight the cash shortages apparent in the nation. He said that his scheme had a very low risk for the interested and an unbelievably high return.  He said that clients can send him money through Ecocash and he would then pay back the money double the amount in a period not more than 6 days. If that does not sound stupid and impossible to you then you need more understanding on how money and investments work. These are Machamu’s words “if you invest in this thing you will get rich beyond your wildest dreams, this isn’t a scam and all transactions will be done through Ecocash so you must send me your National ID and I send you mine in return.” Owen did not at any point highlight how he would be investing the money. As usual many people sent him money and after just  a huge unknown number had sent the money his numbers and Whatsapp shut off completely till today. How this dude convinced people to trust in his nonsense remains a mystery and it was just after thousands had lost money from MMM.

MMM is one of the most infamous scheme that gained a lot of recognition in the nation. This scheme did not even last a year. The Reserve Bank of Zimbabwe issued countless warnings that this pyramidal scheme was not authentic but still people having seen many testimonies could not refrain from joining. MMM  posed as a  financial aid where a subscriber could get assistance that was 30% more than their initial investment. This then implies that aid that is given to an existing subscriber is dependent on new members joining. However we operate in a world with a finite population and people are bound to stop joining at a certain stage. The numbers tell you that this kind of scheme is likely to dive nose down into disaster over time as the numbers of those needing assistance increases while new recruits continue to dwindle, which is exactly what happened. Those in need overwhelmed those providing the money by joining and it started by apologizing that they would be delays on cash outs  and the next thing MMM disappeared into thin air. Gone, Forever.

These schemes are called pyramidal for the reason that those at the top benefit only and are supported by the many who are at the bottom. A pyramid grows thinner as you go up and therefore only few are at the top and only a few benefit.

These schemes continue to thrive and grow in our nation because people are desperate and working hand to mouth to earn a living every day. These economic vices can never be loosened if things continue to spiral downwards in our country. There is need for an economic turn around if these get rich quick schemes are to be annihilated.  New schemes have since emerged and continue to have lots of membership. Schemes like the U.S based Iraisers which surfaced in November 2016 and had above 1 000 members by December 2016. Other schemes like Bitcycler, the Earning Members Community (EMC) and Four Corner Alliance have also thrived in Zimbabwe.

A note from StartupBiz Zimbabwe: Everyday we send business updates via Whatsapp. Send the word “Subscribe” via Whatsapp to +263778798072 (StartupBiz Zimbabwe) to receive free business ideas and business tips in your Whatsapp Inbox everyday.