Nyarmid: (defn) Nairobi pyramids are not physical structures, but they are everywhere, some in classy buildings, and some in run-down ones where they do business, spread the word, and churn the money.

They are known as investments schemes, savings plans, multi-level, merry go rounds, revolving funds, savings plans, investments. No one calls them ponzis or pyramids.

They are unregulated and their exclusivity and extremely attractive returns make them too enticing for many. They spread virally, by word of mouth from people eager to share their good fortune, to others who have not seen the light.

One group is associated with an up-coming communications company. Maybe the company wanted to tap a cheap source of unlimited funds for expansion instead of going to a bank – but it has worked for the company which still runs one of the better-established funds.

The wars between funds are vicious with some bad-mouthing their competitors. One allegedly leaked information to the CBK – leading to the swoop on a competing group last week.

They are untouched by any authorities, even though the Central Bank of Kenya (CBK tried to shut down one last week. They will not be affected even by the micro-finance bill scheduled to pass through parliament later this year.

Since they don’t lend money, and are not accepting deposits, I can’t see how they can be regulated by the CBK. But many rely on the banking system, giving some oversight to accounts that have high volumes of transactions and values. Even bank tellers are curious enough about people banking multiple checks into their accounts to ask about how/where they can sign up!

The shocking thing is they actually work – or have worked for some people. I have never joined one, but know many who have – friends more accustomed to risk, some who have invested as little as 2,000 to as much as 100,000 shillings in more than one of these, with the money doubled in a year. Some have provided a steady monthly income that supplements or even doubles their monthly income. Maybe because of their better contacts and networks, they are at the top of the pyramids, the early investors who get paid by the later investors, but they have all done very well.

I almost feel stupid for not joining any. Am I any better for buying shares in Uchumi or leaving money in the bank earning almost nothing from a savings account?

My problem is I am too cautious, too curious, ask too many questions. Questions the backers of these never want to answer. You’re either in or you’re not, you want to get paid or you don’t. Still, I rely on the conventional wisdom that nothing is free and anything that sounds too good to be true, probably is.

31 thoughts on “Nyramids

  1. coldtusker

    You know, I know… most of these are scams! When the Albanian government stopped a huge Ponzi scheme… bam… there were riots!

    BTW, the last guy loses SO if you are not on top then watch from the sidelines while the bottom guys/folks suffer!

    Please provide more info on this “up & coming” communications firm.

    Which one is it?
    What do they offer?

    If the info is “private”… please send it to my e-mail!


  2. Kudrinketh


    Banks you are better off investing your money elsewhere.like coldtusker says,the money simply travels up the chain, and only the originator (or at best a very few) wins in swindling his followers.

    of course, the people in the worst situation are the ones at the bottom of the pyramid: those who subscribed to the plan, but were not able to recruit any followers themselves. to legitimise the act, most such scams will have fake referrals, testimonials, and some fake merchandise or buusiness.any way you look at it,its all a SCAM.

    i know of one pyramid scam that made its rounds in states earlier this year. they did not even pretend to be selling some worthless product, but guess what, they stull suckered poor kenyans.

    manze this scam left buddies and relas pissed off at each other,broken relationships, people calling immigration cops on each other and a few perpetrators even going to jail.

    and coldtusker, any ‘business’ people have to hush in ‘private’ is a SCAM. so its a matter of being the fraudster or the defrauded, i choose to be neither.

  3. Ntwiga

    So, these schemes work if you get in early but don’t if you get in late . . . how do one tell how far into its life the scheme is?

    Since its impossible to really tell, it is probably safer to stay out of it or become one of those late investors who lose everything.

    And if nothing else, its unethical since one knows that they are essentially getting something for nothing . . .

    On another note, toboa on this comm firm . . .

    – Steve

  4. gathinga

    while the is is hot, i’ve heard stories from buddies and colleagues about sasanet and another scheme kings scprit

    Kngs script was later exposed in one of the weekend magazines few months ago.

    but sasanet continues to rule paying as much as 10% monthly. i know someone eho has ut in 1m.

    Can anyone tell us the catch?

  5. Mashatall

    Gathinga i was in kenya last month and heard about sasanet, which went as far as forming a sacco so that they would not attract CBK’s attention.A lot of people have put their money into the firm, which is engaged in value added services and is touting it as Angel Investing. Funny thing is that they do not divulge a lot about their operations, for all we know they might be investing the money offshore or even in the NSE. They might even be shylocks, but with good returns and having been around for over three years. then it means that they might be using the money as working capital, and are sharing the profits with angel investors. Investing is a risk, and yes i did put some money into the firm, but its money that am ready to lose if need be, but i have seen what sasanet has done for some of my buddies, who have invested more than a million in the firm, and has enabled them acquire properties and start businesses with the returns.I might be stupid on this one, but am putting my money on the line. One year might be good enough for me, and then i bail out !!!

  6. Mitzy

    Last month, the Securities and Exchange Commission in the US was seeking to shut down a network of 25,000 websites whose operators were running a $15-million pyramid scheme. These sites sold themselves as “marketing networks”.
    When one visits these sites, one is asked to fill out forms and is later called by representatives selling memberships. New members are then issued their own websites and eventually can receive a share of the money when more people buy memberships via their sites.
    Such schemes are definitely going to proliferate around Kenya, so beware of scams that promise large rewards in a short time for relatively small upfront investments.

  7. toiyoi

    Like all pyramids, its the apex that is sustains by the base. As long as the base grows, the top guys keep reaping( i must add, where they did not sow). Whne it terminates, a large base will have lost lots of money.

    Take a sample US case(targeting esp foreign communities that tend to be communal). You put in $1000 and when you recruit 6 others, you get paid $7000. Sounds good. But suppose it terminates after you get 5 guys, and assume your 1st recruit recruits 4 others, your 2nd recruit recrits 3 others, etc etc. You get the point( this is series). If everything terminated at that point, the guy who got you in (master) has a cool $28,000. You and those below you get $0. So even if you had gotten your 6th person, and got your $7000, ALL those below you lost. And if your master were to fails to deliver, where do you take the case?

    Nothing is free, and the base will always be the sucker punch(es)

  8. mwasjd

    Nyramids means that if you are at the top, you make the money. I thought that is the whole essence of capitalism. Stay at the bottom, make nothing and spend everything, but at the top, make everything and recover what you spent earlier.

    I don’t think it is a scam because the deal is spelt out clearly for you. If you recruit, you earn. If you don’t, you lose. People just need to learn how to make the right decisions. I agree with mashatall that investing is a risk, but when it pays off, nobody remembers the risk part.

    Despite all this, I’m not one to join a pyramid scheme.

  9. ncrwcc

    The general consensus is that this is a scam. The National Centre for Research on White Collar Crime (NCRWCC) Nairobi endorses that view.

  10. bankelele

    coldtusker: That’s what’s shocking – THEY WORK (or for earlier/better infomed investors)
    – comm. company has been ferreted by Gathinga & Mashatall

    Kudrinketh: Don’t worry, am not biting any
    – TPS bulk trade should have shown up on the bulk trade list. I think TPS were offloading some shares to comply with the NSE 75% rule. Kenol is also doing the same.

    Ntwiga: No way to tell, but if someone tries to sell it to you (and you’re already in), maybe it’s time to jump

    gathinga: Sasanet seems more legit than the others like kingscript (which was fronted by a chuch group)

    Mashatall: Good point, some of them use the SACCO mode since they are very established and saleable
    – Oh and a few of them tout “offshore investments” as the source of their great returns – which is highly unlikely

    Mitzy: I think they are more sophisitcared in the states, but here even simple things like selling lists of names (and banking in each other’s accounts) is good enough for marketing purposes

    toiyoi: the base is ever expanding thanks to good word of mouth marketing from one’s good freinds and colleagues. i.e. “it’s good enough for them, so i can do it too.” The one you desribed allows early investors, to dip in & then cash out, while the wave they created will pull in many more for a long time long afterwards

    mwasjd: They are working, and there were some very angry people on TV when one office was shut down saying that “the rich don’t want the poor to suceed”

    Shiroh: Me to, but I have been tempted and people around me are making (very) good money from them.

    ncrwcc: Is the NCRWCC for real? you shoudl give advice to KACA

  11. coldtusker

    What is Sasanet?
    What do they sell?
    Are they junk bonds?

    When the gov’t closed down a Ponzi scam in Albania there were riots!

    The authorities need to shut down Ponzi schemes before the spread gets too deep & wide.

    Or warn them. If they don’t listen coz of GREED, shauri yao!

  12. chumviKiasi

    Good grief, this is shocking to learn. I did not know these things exist in Kenya,that people actually use them and that the government does nothing to stop them.

  13. Ntwiga

    Make no mistake people, this is NOT an investment.

    These schemes are not engaged in any production and do not offer any services or do anything with your money apart from pay off people.

    Like toiyoi clearly stated, new people have to keep coming in with new contributions to make funds available for their “masters” to be paid. When this stops, the whole thing will come down.

    Putting money into these things, SACCO or not, is banking on getting something for nothing.

  14. Mashatall

    I did my due diligence before putting my chums into sasanet. They are venturing into call centres ( for akina safaricom and celtel) since they cannot handle the customer service side, and are behind the KPLC check your bill on a mobile promotion. As we speak they are steadily recruiting on the software development side, and my bet was that the money they are puling in is going towards all the initiatives they are trying to roll out. Am not saying that they might not be a scam, but i know what pyramid schemes are, and they better be fronting real good to draw in the kind of money they are getting. Like i said no investment is risk proof, but i believe that this guys might be on to something that has not been tried and tested in kenya 9angel investing), and while we wait on the sidelines too scared to invest, others will be walking away with profits that were well invested.
    My take is it does not harm to see where this goes, and i chose to go with my gut feeling on this one, not pure greed !!!

  15. M


    What about these dodgy reselling businesses like GNLD, Tianshi, etc where you buy from some guys and then sell to others

    I think these are just as dodgy!!!

  16. kenyanentrepreneur

    unless you are a manufacturer, most people have to buy “from someone” and “sell to others” — so, that’s not necesarily bad.

    If you buy something “from someone” @ 2ksh and sell it to someone else @ 15ksh, you’ll have made a profit of 13ksh. That’s a legitimate business.

    As for the other schemes – there is no such thing as easy, fast money (unless you steal it) or unless your the founder of a company like youtube, which was started one year ago and sold today for a billion dollars!

    Those are your only choices: steal or start an internet company.

  17. kenyanentrepreneur

    unless you are a manufacturer, most people have to buy “from someone” and “sell to others” — so, that’s not necesarily bad.

    If you buy something “from someone” @ 2ksh and sell it to someone else @ 15ksh, you’ll have made a profit of 13ksh. That’s a legitimate business.

    As for the other schemes – there is no such thing as easy, fast money (unless you steal it) or unless your the founder of a company like youtube, which was started one year ago and sold today for a billion dollars!

    Those are your only choices: steal or start an internet company.

  18. 69//

    The viral marketing, apart from relying on greed, seems to be a major booster for such schemes.

    I’m just trying to imagine if a close family member/friend introduced me to one of these things then I’m already predisposed to ignore my gut feeling.

    Govt. shouldn’t just give caution! They should be a crack down; but since it seems that regulating these things will prove to be difficult, we can have a good old fashioned lynching of the apex when one of them finally collapses 🙂

  19. bankelele

    coldtusker: Authorities here not aware of mahy of them, nor would they have the teeth to do much. It is simply buyer beware

    chumviKiasi: It’s an appetite for making money, using the little you have to maximum benefit.

    Ntwiga: That’s the point. Thye work – you make money for doing nothing. ok ‘investors’ take a huge risk putting money into ‘nothing’ – but they get a huge return (if) out of nothing!

    Mashatall: Thanks for the info about Sasanet. The people I know who invested in it, know jack about it.

    coldtusker: I believe Sasanet has achieved most of its funding goals and the returns now as not as generous as they were a year ago

    M: Ok those wowmen one have a product to sell, however tangible the products may be. I want to attend one of tehir award shows where they give their top sellers BMW’s!

    kenyanentrepreneur: Some of them have spread so much, that people around you each have product to sell.
    PS: Is Mary Kay products still selling in the states? These are similar

    69//: True – viral marketing & greed. I woudl not be comfortable selling these to my freinds, but after a few cycles of good returns, i’d share thsi with them, with a warning!

  20. Anonymous

    I always tell people that if banks-which are legitimased form of pyramid-i.e. the more depostis they get the more they can lend and make a killing on the margin-can collapse, then be very wary of pyramids. Kwa hivyo, I want to start a bank…

  21. Sallyw

    Anyone onthe Family Finance shares?Is Family Finance cashing in on money frozen from some of the investment schemes, then of course maybe they don’t want to let go, so they are now offering shares to account holders!
    Please help me on this one.

  22. roughalmasis

    The architects of the schemes understand the mathematics. Pyramid schemes benefit the pioneers. If you are operating at a particular geographical area, say Nairobi, the collapse comes when you reach saturation point(when members reach all possible prospects). At that point those at the top jump out.

    I doubt Kenya laws can protect anyone on this. When authorities take action it is reactive, and they cant go far. Organisers know that if you sell a product you are in MLM or Network Marketing and not Pyramid or Ponzi.

    Have you heard of the latest, Amega Global which sells magnetic therapy products ? Anybody know anything about magnetic therapy and whether it works ?

    To cheer you up sample this: “Men are so simple and yield so readily to the desires of the moment that he who will trick will always find another who will suffer to be tricked” by
    Niccolo Machiavelli – from quotes and observations from wiser women and men than I.

  23. ncrwcc

    Well, pyramid schemes are white collar crimes, just like any other.

    White collar crimes are difficult to prove and even tougher to obtain a conviction.

    The best advice is prevention….learn how not to be a victime…and NCRWCC will teach you how to do this.

  24. ncrwcc

    Well, pyramid schemes are white collar crimes, just like any other.

    White collar crimes are difficult to prove and even tougher to obtain a conviction.

    The best advice is prevention….learn how not to be a victime…and NCRWCC will teach you how to do this.

  25. Danial Ieman

    About Amega Global,

    One of the agent came and shown demonstration about the benefit of the bio-magnetic bracelet.

    They claimed that it is made of titanium with 2000 gauss(magnetic strenght) that improves blood circulation.The Neodymium magnetic is claimed to last for 300 years.

    They even did the physical demonstration by summoning audience to come forward to the stage.

    I was one of the audience and its was hard not to disbelieve because I could feel the difference by wearing the bracelet while the agent did the demonstration to me.

    Or is just a trick? Could anybody give your opinion about this matter?

    I also have a video demonstration in .mpg files

    I would be very much appreciated.

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