Legend has it that a man visited a remote village and told villagers that he could buy monkeys for $50 each. The villagers could not believe the good news till he bought the first 20 monkeys.
Everyone ‘saw that he was genuine’ and started hunting for monkeys for sale. Huge returns were realised till the forests were almost empty of monkeys.
The visitor came back again (they always do) and offered a higher price of $100. The villagers worked hard, waking up as early as 2:00am scouring the forests and mountains. Only a few managed to get them and selling at the premium price.
Then the visitor increased the price bait to $200 and promised to return the following month. A friend of the visitor came to the village selling monkeys for $150 and the villagers bought all of the monkeys in anticipation of the selling price of $200.
Then the unthinkable happened – the buyer who had promised $200 never returned leaving villagers to count their losses.
This is how ponzi schemes are designed 101. Citizens minding their own business witness ‘visitors’ who create opportunities from ordinary products or services. Those who grab opportunities swallow the bait igniting a scramble -who doesn’t want money? When the visitors have made a targeted profit, they perform a disappearing act leaving many with huge losses.
Does the Chihuta business model come to mind?
How about MMM business model?
Can we add the Sack Potato model?
How about some network marketing business model?
New churches or religions?
The forex market scam
A few buyers come up with a target amount of forex they need from the street. They craft a strategy in phases.
The first phase: Currency rates slowly go up.
The second phase: The rate of increment spikes moderately.
Like the villagers and the monkey business-everyone rushes in in the second phase. Meanwhile, the buyers have not reached their target. So they increase the rate for the final time. The whole nation panics, a scramble to buy goods kicks in, some move to the market to trade forex.
Targeted forex amount reached-the market then crashes with the prices of monkeys going rock bottom. After all-monkeys have little value in the village!
Check rates movement around September to October every year or bi-annually!
Now some youngsters in the village have mastered the technique. Whenever the visitors come, they gladly participate in the monkey hunting business. They fetch a targeted number of monkeys, sell and then return to their ordinary business in the village. They don’t wait for the second buyer or seller to come but leave unsuspecting new villagers to participate in the scam. When new villagers burn their fingures, they will learn the hard way and some swear never to hunt for monkeys ever again.
With time, the visitors now know that villagers are trying to beat them to their game and up the ante. This is not a win win situation; someone has to be scammed-visitors always WIN.
Who changed money at the rate of 1:13?
Who moved in when the rate hit 1:17? The first bait…
Who rushed in when the rate hit 1:20? The second bait…
Who gate crashed when the rate hit 1:25? The final bait….
In Shona we have a saying ‘Kana kangoma koririsa? Now the rate has crashed (they always do)….the visitors are nowhere to be found and villagers will have to lick and nurse their wounds. Its game over! Elders in the village will be providing counsel saying we told you so dint we? Takabva neko kumhunga…Ndamba kuudzwa?
Next year, there will be new youngsters oblivious of the game or will defy advice from the elders of the village and the cycle will continue ad infinitum!
Next time, the visitors may even come with a different bait so as to overcome resistance from enlightened villagers.
Lessons from the Bitcoin Bubble
Did you witness the Bitcoin value shooting up to US$20.000 in December 2017? Then it crashed to US$4.000? Hundreds of millions were lost in the process and sadly its not documented. The only documentation that exists is that of Zimbabweans who lost US$6 million to the ponzi MMM scheme. No statistics exist of how much street traders lost due to the currency volatility witnessed over the past few days. The absence of statistics or lessons leant means there will always be ample room for more such schemes.
Had the villagers ignored the monkey buyer, they would not have lost out. The monkey buyer knew that fast money or fast returns will always attract multitudes. Whilst village elders will be resisting, the young generation wants quick returns
Final word
Be wary of visitors. The first visitors on African Soil were traders and merchants. They provided the bait and locals swallowed line, hook and sinker…the first phase. They kept on coming with all sorts of goodies developing more trust…second phase. In the final phase they came with guns and took over ownership of all African resources!
From our third upcoming book: Business Opportunities for Zimbabweans 2020 Edition.
