As people battle with the cash crisis in a country grappling with an unemployment rate of around 90%, where the majority of the population ekes a living out of informal trading, it is tempting to run after any deal that promises to put food on the table.
A group of women from Kuwadzana were at each other’s throats last week after they discovered that they had been swindled of their money by a trusted friend who had encouraged them to join the scheme in order to solve some of their financial crises.
They mobilized themselves and visited the offices – only to discover they had moved to an unknown destination. “The idea was so genuine and I hoped that if I embarked on the project my financial problems would go away. Plus the person who came to me with the idea was a trusted friend and I did not suspect anything.
The only thing on my mind was to make more money, so I mobilized some of my friends from the community,” said one of the group members, Selina Nyoni. The illegal pyramid schemes promise huge and easy profits to “investors”, though they eventually collapse after the owners have benefitted. They have recently resurfaced in Harare with hundreds of people thronging to register at offices hosting the schemes.
Some of the schemes have been using Econet’s Ecocash facility as a medium for prospective members to deposit their money into an account which has a minimum of five existing members listed on a card. They have to pay another $5 as an administration fee to the scheme operators. Those registered for the scheme then have to recruit more members in order for them to start benefiting. The pyramid operators say one would be removed from the list after realising $15,000 and that this can be done within a short time.
After registration, one is subjected to a verification process, where representatives of the club check the cash transfer code numbers to ascertain authenticity. Once endorsed with a signature, the prospective member takes the names of the five members he/she would have deposited the money together with a $5 administration fee to the owners of the scheme. After completing the initial process, the prospective member would have to wait for at least two days to receive five cards bearing the member’s name and the four existing people who would have received the money deposited through Ecocash.
Those who operate the scheme say that members continue to benefit as long as their names appear on the cards of new members. There are some who now spend time chasing after potential recruits and those affiliated to them to ensure that they are also recruiting more so that they quickly benefit.
“It is obvious that this thing is too good to last, that is why I have to make sure that my recruits work hard so that I benefit before it blows off,” said one of the members of the scheme at the Kwame Nkrumah offices.
“I have joined two of my sons, and this means I have used close to $100, but this does not worry me because I am told each one of us will get at least $15,000 at the end of the cycle,” said a woman who refused to divulge her name.
Econet has disassociated itself from these dealings, saying anyone who has fallen prey to the schemes should not hold them accountable. Police said they had begun carrying out investigations into the schemes.
“Some years back several people lost their hard-earned cash through such a scam with only those who started them benefiting,” said a senior police officer. The only people who may profit in a pyramid scheme are those at the very top of the actual pyramid.
The money pyramids hit Zimbabwe in the 1990s and resulted in people thronging police stations with inquiries on how they could recover their money after they collapsed.
Those behind the pyramid schemes go to great lengths to make them appear genuine through multi-level marketing plans.
According to legal experts, a pyramid scheme is a fraudulent investing plan that has fooled a lot of people worldwide. They always fail because the profits rely on signing up new members to the scheme and eventually, every scheme runs out of fresh recruits.
Post published in: News