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T H I S D AY • THURSDAY, DECEMBER 29, 2016
EDITORIAL THE MOVE FOR REGIONAL INTEGRATION
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The South-west regional initiative for cooperation should be encouraged
recent meeting of governors of the South-west states in Ibadan, Oyo State, hit the headlines as it forcefully returned to the front seat of national discourse, the concept of regional integration. Coming against the background of certain political realignment in the country, not a few people ascribed political meanings into the move by the governors. At the end of the meeting, the six governors within the zone said they were seeking new ways of cooperation to better the lives of their people, pledging to work towards a common goal of promoting economic development of the region. No doubt, the reluctance of President Muhammadu Buhari to consider the recommendations of the 2014 National Conference, among which is the progressive dilution of the powers of the centre in favour of the federating units, has made regional integration a pleasing alternative to the much more desired restructuring of the Nigerian federation. The conference had recommended several steps that would devolve many of the responsibilities on the exclusive list to the concurrent list in THROUGH THE PRINCIPLE OF the 1999 ConstituECONOMY OF SCALE, STATES tion as amended so COULD LEVERAGE ON THEIR that state and local AREAS OF STRENGTH AND governments could SUBSEQUENTLY IMPACT appropriate and POSITIVELY ON THE REGION deliver on them for AS THEY MUTUALLY BENEFIT the betterment of FROM THEIR COMPARATIVE their people. Notwithstanding, ADVANTAGES. contiguous states have begun to revive the concept of integration of economies and social services. This, for understandable reasons, has taken regional forms as states within geopolitical zones in the country find that their needs are related and could be collectively met. Through the principle of economy of scale, states could leverage on their areas of strength and subsequently impact positively on the region as they mutually benefit from their comparative advantages. The governments of the South-west states of Ekiti, Lagos, Ogun, Ondo, Osun and Oyo headed in this direction with the establishment, in 2013, of the Development
Agenda for Western Nigeria (DAWN) Commission. It is designed as the institutional and programme management body to midwife the region’s integration agenda by coordinating the delivery of its composite development aspirations. The agenda focuses on mobilising the collective strengths, assets and capabilities lying within the states of Southwest Nigeria, towards achieving sustainable socioeconomic growth and development that would result in high standard of living and improved well-being for the people of the region.
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T H I S DAY
EDITOR IJEOMA NWOGWUGWU DEPUTY EDITORS BOlAJI ADEBIYI, JOSEpH USHIGIAlE MANAGING DIRECTOR ENIOlA BEllO DEPUTY MANAGING DIRECTOR KAYODE KOMOlAfE CHAIRMAN EDITORIAL BOARD OlUSEGUN ADENIYI EDITOR NATION’S CAPITAL IYOBOSA UWUGIAREN
T H I S DAY N E W S PA P E R S L I M I T E D
EDITOR-IN-CHIEF/CHAIRMAN NDUKA OBAIGBENA GROUP EXECUTIVE DIRECTORS ENIOlA BEllO, KAYODE KOMOlAfE, ISRAEl IWEGBU, EMMANUEl EfENI, IJEOMA NWOGWUGWU GROUP FINANCE DIRECTOR OlUfEMI ABOROWA DIVISIONAL DIRECTORS pETER IWEGBU, fIDElIS ElEMA, MBAYIlAN ANDOAKA, ANTHONY OGEDENGBE DEPUTY DIVISIONAL DIRECTOR OJOGUN VICTOR DANBOYI SNR. ASSOCIATE DIRECTOR ERIC OJEH ASSOCIATE DIRECTORS HENRY NWACHOKOR, SAHEED ADEYEMO CONTROLLERS ABIMBOlA TAIWO, UCHENNA DIBIAGWU, NDUKA MOSERI GENERAL MANAGER pATRICK EIMIUHI GROUP HEAD fEMI TOlUfASHE ART DIRECTOR OCHI OGBUAKU II DIRECTOR, PRINTING PRODUCTION CHUKS ONWUDINJO
et DAWN only followed the footsteps of BRACED, an acronym for the six South-south States of Bayelsa, Rivers, Akwa Ibom, Cross Rivers, Edo and Delta. Set up in 2009, by the six states’ governments who agreed to collectively pursue economic cooperation and integration with the sole objective of accelerating the development of the region, the BRACED Commission was established to drive the process of economic cooperation and integration among the South-south states. The compelling argument of the developers of regional agenda is that it would leverage repressed communal assets, talents and resources located within the region, by side-tracking limitations placed on the country by the inchoate Nigerian federalism. We cannot agree less with this concept. Given the nebulous nature of the nation’s federal system, regional integration and cooperation has become a development imperative, since it prescribes an alternative road map for achieving social and economic development, in the hope that successful models and best cases could evolve which could be copied or replicated across zonal boundaries. This way, duplication of efforts among states would be reduced, providing the basis for more efficient coordination. With states reaping economies of scale, expanding their markets and collectively exploiting their resources, we think the chances are that the region’s economy would be strengthened, holding out hopes for the fast-tracking of Nigeria’s development process as positive competitive regional initiatives and actions across the country thrive. Our charge to the promoters of this concept, however, is that they should quickly go beyond seminal pronouncements and take concrete actions that would translate the idea to practical reality.
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THE RISE AND IMMINENT FALL OF MMM `
bout six months ago, I was engaged in a discussion with a childhood friend who occasionally asks me for investment advice. After discussing my view on the near term outlook of the exchange rate, he cunningly asked for my opinion about an investment scheme currently making the rounds. “By the way,” he said, “have you heard about MMM”? I responded that I had not and that the name did not sound like that of a credible organisation. Certainly, I would not name any business of mine MMM, but then that is me. He chuckled and urged me to look up the investment scheme and give my thoughts as soon as possible. When he spoke about MMM, the enthusiasm in his voice was infectious; as he walked away, he had a spring in his steps and was smiling to himself like someone who had discovered a hidden gem. I went online to read about MMM and came across a plethora of materials and discussions. Many people had invested in the scheme and many more people were investing or considering investing in the scheme. As I continued reading, I identified several fundamental flaws in the investment scheme and it made me wonder why the scheme had caught on as much as it did. Afterwards, I called my friend to discuss my findings and tried to convince him not to invest in the scheme because I believed there was no business case to sustain the model. For those who do not know about MMM (highly unlikely that you have not heard about it except you live under a rock where
the gospel of MMM is yet to reach), permit me to provide a brief background. MMM is an online platform that thrives on the logic of giving and receiving help. It allows a user render help to people (similar to giving a loan) with the promise of repaying the principal plus a 30% interest in a month. Whilst the platform has a few other intricacies, the idea is basically about giving and receiving help at an attractive rate. The scheme was developed by a Russian billionaire, Sergei Mavrodi who was jailed having caused turmoil in the financial system of his home country some two decades ago. Many people went bankrupt and a few committed suicide after his “overnight make me rich scheme” went bust. Mavrodi declared MMM bankrupt on December 22, 1997, subsequently disappeared, and was on the run until his arrest in 2003. In 2007, Sergei Mavrodi was found guilty in a Russian court of defrauding millions of investors of 110 million rubles ($4.3 million). Over the years, Sergei Mavrodi has modified the scheme and has introduced it to several countries around the globe – particularly emerging and frontier markets (including our dear own Nigeria). Suffice to say, MMM will go bust one day, the question is when? Furthermore, the business model is not sustainable. I kept trying to figure out whether MMM invests in businesses that generate returns. If otherwise, where does the 30% interest that the scheme pays come from? According to the theory of “Zero-sum game” – one person’s gain is a loss to another. This means that someone must pay for the free lunch – if not you,
then those coming after you. Have you taken time to ask yourself “What is in this for Mr. Sergei Mavrodi of MMM”? “How do the operators make their money? What is the value being created that generates the extra interest being paid”? There are clearly more questions than answers. The Security and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN) have issued a scam alert on MMM and the House of Representatives has constituted a “committee” to investigate the scheme. Whilst we await the outcome of their investigation, we should remind ourselves about some basic tenets of investing - is it sustainable? Sustainability is not about if someone has made money from it, it is about if people will continue to make money from it. A scheme that gives you money without receiving any value in return is a scam. Lastly, why will someone pay you 30% monthly for investing? This is equivalent to 360% annually (simple interest) and 2230% annually with compounding interest – this is ridiculous and unsustainable. Even if the past is not a perfect predictor of the future, it remains a good guide. Remember that all earlier Ponzi schemes have failed – Nospecto and the popular Wonder Bank schemes happened in the not so distant past. They once seemed like the real deal and many people made money from them. They spread like wild fire but went out with a great bang. When these schemes fail, they do so spectacularly, the attendant losses are much greater than the gains and the longer they last, the deeper the holes they create. Olalekan Olabode, CFA olabodel@yahoo.com