ZIMBABWEANS have taken to developing their own unique pyramid schemes to get hard cash as the hunt for the United States dollar intensifies.
Amid growing shortages of the dollar from the market, get-rich-quick schemes are slowly becoming a viable alternative source for cash besides banks.
In December, a source told Standardbusiness of a low-investment-high-return model developed by some individual going by the name Owen Machamu.
Machamu claims to offer clients a 100% return on an initial investment of $100 after six days.
“Just invest with me, you will get rich. If you invest $100 after six days you get $200. If it is $200 you get $400 after six days, meaning it is 100% profit interest,” Machamu said.
When Standardbusiness pressed Machamu on what guarantees he offered returns once he was given the money, Machamu stressed this was no scam.
“This is not a scam hey; when you send your money you also send your national identification and I also send you mine,” he said.
“I prefer EcoCash transfers, they are convenient. I trade, what I need is to employ large capital.”
Machamu refused to reveal the nature of his trade.
Further investigations however showed that Machamu already had a steady number of clients after he claimed to have reached “five figure digits”.
“Maximum investment is $4 000 for six days,” he said.
Standardbusiness later learnt he was doing some form of commodity trading.
A source said last week that he engaged the profit spinning extraordinaire with an initial $100. But instead of receiving the 100% return after the said six days, what followed were delays and excuses in profit realisation.
Later in the following weeks, Machamu’s WhatsApp and cell number went inactive and remains so to this day.
For Machamu, his scheme was different from the usual model of pyramid schemes where people recruited members via a promise of payments or services for enrolling others into the scheme.
It was different in that a person provided money based on the promise that Machamu would somehow return the money after his “solid trades”.
Central bank governor John Mangudya said the springing up of people like Machamu showed that they were receiving money from illegitimate transactions.
“We are against people investing in those pyramid schemes because they are going to lose their money and this has happened before. Throughout the whole world, a pyramid scheme is a pyramid scheme; there are others who benefit while others lose. Our advice is very simple; people should use the banking sector for investment of their money,” he said.
“In fact, what we are saying is that those people who are investing that money, where is it coming from? It shows that Zimra [Zimbabwe Revenue Authority] has to work very hard to check those people who are investing that money because it is not gainfully earned.”
According to statistics compiled by economist Ashok Chakravati, there is about $232 million in hard cash circulating in the market. The statistics were compiled with figures from the ministry of Finance, and the Zimbabwe National Statistical Agency.
Chakravati said the economy required at least $900 million in circulation and nostros to avoid the declining levels of the United States dollar.
Such money would lower the propensity of people to join pyramid schemes as “get-rich-quick” ventures.
One of the most infamous pyramid schemes to have entered the country was MMM Global.
The online Ponzi scheme invaded the country at the beginning of 2016, but had collapsed by September resulting in thousands of people losing their money.
In November, a United States based pyramid scheme, iRaisers, entered the market and by the second week of December membership had gone up to 1 000.
A source told Standardbusiness recently that iRaiser membership had grown to 1 500.
iRaisers, a United States based company, works on a 3×3 matrix marketing system, where every member is required to refer three members each, after which every additional signup would cause a spill-over, making the matrix fill faster and adding more income.
Financial expert Persistence Gwanyanya said pyramid schemes had become a way of life for Zimbabweans who had been reduced to rent seekers, dealers and arbitragers as the economic situation deteriorated.
“Money schemes and betting are now thriving businesses in Zimbabwe as citizens strive to eke a living every day. The sprouting up of these nefarious activities could be a result of desperation among the generality of Zimbabweans as job opportunities in the country dry up,” he said.
“Unless the economic situation improves, these economic vices will be difficult to eradicate.”
Last year saw a record four pyramid schemes making headway. These are iRaisers, Bitcylcer, the EMC and MMM Global. The rise in these schemes is due to the predominant usage of the United States dollar, the amount of money in circulation in the informal system and market potential.
The 2014 FinScope Consumer Survey found that only 30% of Zimbabwe’s adult population were banked. The survey estimated a whopping $7 billion was circulating in the informal market among those unbanked.
As such, the analysts say the 70% of the adult population unbanked is a lucrative potential market for these pyramid schemes as they have ready access to cash. Standard