People have long been prey to pyramid schemes all over the world, and it seems that Uganda is not an exception. (Apparently South Africa has already made pyramid schemes illegal, according to Wikipedia.) I was in my office today and I overheard my co-workers discussing a finance club, some disparaging, others curious, so I asked about it – and was told, “Melissa, they will steal your money!”
The Together as One Community Project (TACOP) claims a mission “To enable the community to raise investment Capital through net work saving” and encourages members to recruit more members to deposit money into specified bank account. Each new member deposits 10,000 UGX (~5USD) into the TACOP bank account (Post Bank 1630003000139), and 5,000 UGX into each of seven (7) other member bank accounts, all listed on a numbered page (the paper I’m looking at is numbered 169). Thus, joining entails a cost of 45,000 UGX (~25USD), but with the “promise” of earning 5,000UGX per person recruited to the project by their recruits.
There’s a very nice chart on the back, explaining that “your one form will turn into 3 forms, 9,27,81,243,729,and 2187, as you earn UGX 5,000/= from each form,” and showing that at level H they will have an income of 10,935,000/=. They of course forget to mention the detail that each level requires the recruitment of 3 times as many people , and that at level H, if you get there, the so-called the community project has earned 32.8M UGX (16,400USD) from your “descendants” alone. There’s no information on who runs this project, or how they plan to use this money.
They even suggest you can rejoin the program – presumably by paying another 45,000 UGX.
Apparently the “company” has just reached Mbarara, and are claiming that they just arrived in Kampala a month ago (so people don’t believe that the population is saturated, presumably), but my intern notes that it’s been in Kampala for over a year.
So let’s say that the #169 indicates that this is the 169th member of the company to be recruited. That puts this potential member at level 6 or level F in the overall company. To get to their level H (level 12 overall), over 797,161 people will have to have been recruited. At level 16, they will have exceeded the population of Uganda.
What really gets me though is that the fact that maybe 168 people have been recruited already means that some 120 people have probably put in money without actually receiving any deposits, and another 50 have only gotten a little back – whereas the 4 people that started the scheme already have 1,680,000 and 840,000 UGX in their banks.
At least they haven’t figured out yet how to use MTN Money and Zap for these schemes… which I’m guessing might make them largely untraceable given how easy it is to get new sim cards out here.
This isn’t the only pyramid scheme out here, a new one has also started up, with a higher buy in (I think around 95,000 UGX), possibly targeting higher income people. We suspect also that it’s making its circuits right now because the students are returning to start classes, and may have cash on hand for their living expenses and tuition money, so both schemes might be targeting students.
Now here’s the thing that I’m thinking about. What can we do about it? What is the role of development in dealing with pyramid schemes in Uganda? Besides informing the banks and the Ministry of Finance so that they can do something about it?
1. I think we should think about ways in which mobile technologies and other ICTs might be misappropriated to propagate these schemes – not as a reason for not using these technologies, but so we can design better and more secure mechanisms. Do pyramid schemes have an implication for m-Pesa and other mobile finance programs? Or are they irrelevant?
2. I think we should think about how people access information, how they ask questions when they encounter new things like these “finance clubs”. For my coworkers, a lot of information is spread by word of mouth – they know things by rumor, by discussion and stories shared within the office during breaks and at lunch. Very different from our “new culture” of looking everything up on wikipedia, or the culture we might be trying to create by telling people they can query google for information.
3. Rights to information: how can we give people access to the information they need to decide for themselves whether a program is a good or a bad program. Of course this slip of paper doesn’t have “Google Keyword: pyramid scheme” written on it anywhere. So how do they link information resources to the questions they might have? Question Box tries to be a general purpose unspecified answer of whatever questions might come up – but hasn’t come into general usage yet. By American experience I’m not sure that this type of solution would become mainstream – Google Answers and Yahoo Answers seem to only serve particular audiences. Google search is more mainstream, but sometimes requires a some technical skill to get the required answers – and has severe limitations in the types of knowledge one can acquire. Would Google search be adequate for the answers needed by our audiences in developing regions? I can’t tell you how frustrated my colleagues at Mbarara University are by finding academic papers via Google search (they generally aren’t familiar yet with Google Scholar) only to be stymied by restricted access journals.
So, what is the role of ICTs in addressing the day to day issues of Ugandan poverty? Information about pyramid schemes in this case has already clearly benefited the scam artists involved – how can we use ICTs to also prevent pyramid schemes from propagating further?
