In the year 2008, following the economic crisis precipitated by the housing market crash; economists, financial experts and policy makers wrote many books, white papers and policy documents in its aftermath that decried the excessive greed, systemic failures, recklessness, negligence and pervasive culture of institutional irresponsibility that ultimately resulted in the crash. A central theme running through most if not all of the books and policy documents written on the subject were that early warning signs and red flags had been mostly ignored several opportunities had been missed to halt the bubble in its tracks.
It is instructive to note that these books and policy documents were written after the crash already happened.
Many already had their entire life savings wiped out, had lost their homes to foreclosures and were irreversibly in debt. The American government also had to spend billions of dollars in bailout of failed companies. It is generally agreed that had the warning signs been heeded; there was a huge chance the crisis would either have been averted or not been as catastrophic.
The MMM scheme storm sweeping Nigeria shares some similarities with the housing crisis that engulfed the US in 2008. While the context and location of both scenarios are very different, the forces of excessive greed and desperation have largely driven both scenarios. In addition, there is institutional weakness, negligence of relevant watchdogs and government bodies to live up to their responsibilities. We can only hope that is where the similarities end and that the outcomes do not turn out the same.
To gain better understanding of how the nation is being held captive in the clutches of a Ponzi declared illegal in many other countries will require rigorous academic research investigation. There is a need to figure out how various factors interacted to get the country to this current crossroad so we can learn from it and implement better economic policies going forward.
A frequent challenge in social science research is to being able to investigate a social problem as they unfold, and so it tends to be that they get studied after they already occurred. The problem with this is that erroneous inferences could potentially be drawn, especially when determining how factors interacted to result in the eventual outcome. The Nigeria MMM scheme provides a unique and unprecedented opportunity to conduct such a study. That the scheme has taken the nation by storm will be understatement. There should be interest in learning what is responsible for its explosive growth, notwithstanding what side of the debate you find yourself.
A massive debate has been raging for many months on social space on the risks with of MMM scheme. A school of thought believes it has also been fueled by the current economic hardships being experienced by the masses and the perceived insensitivity of the government to the plight of the common man.
Putting up a strong case in defense of the scheme are the MMM participants themselves who have told who care to listen that they are aware of the risks involved when signing up to join the scheme, In addition, they assert it is their constitutional right to invest in whatever scheme they deem fit.
Many participants have praised the scheme to high heavens for financially liberating them from poverty, give personal testimonials and show undeniable evidence to the instant transformation it has brought to themselves and their families. To such people, MMM has been a lifesaver.
On the other side of the debate are antagonists of the scheme who scream from the rooftops, warning of the dangers inherent in such a scheme and the financial cliff that lie ahead for those who put in their money. To them, it is only a matter of time before the scheme collapses and participants lose all their money. In addition, a scheme that provides an insane level of returns for no evident economic activity should be considered dubious and a scam that would soon unravel.
This side of the debate also provides compelling evidence to support its position. Many have also questioned why the government has not shut down the scheme and feel the government has not done enough to protect Nigerians from falling prey to such a nefarious scheme and believe it is a ticking time bomb.
Notwithstanding what side of the debate one stands, it is very clear that such a scheme as the Nigerian MMM cannot continue indefinitely, and that its days are numbered.
The pertinent question is what happens after the demise of the scheme. I believe we all have a glimpse into the future of what happens after the scheme collapses. This is the unfortunate story of a young man in Benue state who took his own life as a result of losing money meant for his wedding ceremony in the scheme.
Are we to expect more such tragic events to occur after the scheme hit the rocks?. That is a very scary thought and gives me chills. Unfortunately, given our penchant in Nigeria not to fret about issues till it becomes a full-blown emergency, it is not surprising that much thought has not been given to such questions.
The currently unfolding MMM saga is deserving of more than just elegantly written articles and heated online debates /arguments but rather should result in a rational inquiry from experts in our ivory towers, financial institutions and policy making bodies.
From a research point of view, this is an interesting research question, one that we should ponder within the academic community and collectively as a nation.
The government and its economic institutions should seek to find out if there are correlations to be found between its economic policies and the wildfire-like growth of the scheme.
Furthermore, are there possible models to give us some insight into the ripple effects on our already battered economy in the aftermath of its eventual crash, come up with a roadmap and plan to handle such a scenario.
The Federal government cannot afford to stand a spectator as events unfold nor can it wish the problem away like a nightmare soon forgotten. Moreover, its excuse of giving several warnings to citizens about the dangers of the scheme will become irrelevant when things finally fall apart as it will become the job of the government to pick up the pieces, directly or indirectly. I fear we are very unprepared for what economic carnage could possibly result, as our economy cannot take any more bashing. The alarm sirens have all sounded and the red flags flying at full mast. It is left for us to heed their call.