19 May 2017

Tanzania: New Pyramid Scheme Takes Dar By Storm Amid Queries

Dar es Salaam — A new pyramid scheme has emerged in the city, conducting the shoddy business that involves the selling of forms to unsuspecting individuals, The Citizen has learnt.

The scheme, which started in January in Dar es Salaam, has taken city residents by storm because it is regarded as an easy way of making money. The scheme, known as Amka Mwanamke (Amwa), operates as both as a non-governmental organisation (NGO) and a business company.

Investigations conducted by The Citizen over the past few weeks have established that Amwa NGO's original mission was to empower women entrepreneurs through equipping them with business skills and providing advice on how to access finance.

Information available on the amwanamke.blogspot.com and the www.facebook.com/amka.mwanamke shows that the company started operating as an NGO on women empowerment issues. The blog further shows that the NGO's goal is to build entrepreneurial capacity among small-scale entrepreneurs by training them on how to become economically independent. Information available also shows that the NGO has accessed grants from various organisations that fund NGOs in the country. The funds were used in all occasions to increase the financial management and administration capacity of the NGO "that focuses in people and in particular, women empowerment."

But owners of the NGO claim in their blogspot to have opened a registered company through the Business Registration and Licensing Authority (Brela) in October 6 last year with registration number 130089. The owners also claim that the company is a registered taxpayer with TIN number 131-741-189. Further information shows that Amwa company Limited is led by the director who reports to a-seven member board of directors.

The NGO headquartered in Isamilo in Mwanza has five branches most of them located in the Lake Zone in Nansio (Ukerewe District), Mtakuja (Musoma District), Katoro (Geita District) and Kashai (Bukoba District).

The Dar es Salaam branch located in Buguruni-Rozana was opened in January this year and seems to be part of the company and not the NGO. The information available from Amwa leaflets, Facebook and blogspot pages shows that the Dar es Salaam branch was opened for the purpose of "helping entrepreneurs economically."

Amwa further says it targets people of all genders especially small entrepreneurs who are facing capital problems.

But the investigation has revealed that most members of Amwa are women.

A director of Amwa who identified herself as Anifa Simon said Amwa started the business of selling forms since August 1 last year. The purpose of selling forms that has nothing worthwhile printed on except the details about the address of the company and the names of four previous beneficiaries (people who bought and sold the forms in a successive manner). The other information available in the forms are bank accounts details of Amwa and of the "top position" beneficiary who was the first to buy and sell the form.

"Amwa borrowed a leaf from Italy where a similar project proved successful," Ms Simon said.

Business of selling forms

Selling forms to people, who in turn, sell the forms to others, is the only activity of Amwa, according to the investigation by The Citizen.

There are nine categories of forms that are sold by Amwa at different prices ranging between Sh2,000 and Sh300,000 per form.

How the scheme works

Before joining the organisation a person has to buy one form at the cost of, say, Sh2,000. He or she then deposits Sh2,000 at the bank account of the person appearing at the "top position" in the form as well as depositing Sh2,000 other at the bank account of Amwa. Both bank accounts are printed in the forms.

After depositing the cash the person then takes the bank statements/receipts to an Amwa branch where he or she is given three forms with his or her name printed at the bottom of the pyramid. She or he takes the three forms and goes to sell/recruit others. She sells one form to one person. The three persons who by one form each then repeat the process through depositing Sh2,000 each to the accounts of the person whose name is printed in the "top position" and that of Amwa. They then take their bank receipts to Amwa where each person is given three new forms with the name of each person printed at the bottom of the pyramid.

As more and more people buy and sell the forms with one's name on it so does the the name of the first buyer climb up the pyramid and once it reaches the "top position" he or she is paid Sh486,000 as "dividends" or "profits".

According to Ms Simon one receives the "dividends" or "profits" after 200 people have bought and sold the forms in a network. This is the network that the first buyer of forms creates the first time he sells the three forms to three other people. In other words the Sh6,000 that a person spends in buying three forms provides "dividends" of Sh486,000.

But the "dividends" could as well reach Sh1.4 million depending on the cost of forms, according to Ms Simon.

The investigation conducted by The Citizen indicates that it can even take a single day for a person to get the "profit" or "dividends."

"It depends on how fast you and your colleagues are in distributing (selling) the forms," noted Ms Simon.

Criteria for joining the scheme

The only criteria for joining the scheme include possession of a bank account which is necessary for depositing the cash.

High demand

Until last week Amwa had registered a network of more than 3000 members in Dar es Salaam alone.

Every day more new members join the company. A fortnight ago, The Citizen observed about 100 people at the Amwa Dar es Salaam branch's surroundings scrambling to submit bank's receipts that is the requisite condition for registration.

While some were seated on benches inside and outside Amwa offices, others were in a queue, waiting for registration.

Others were seated on the Veranda and others just stood outside.

Neighbours told The Citizen when it visited Amwa premises that the organisation is always "full of people." "Today people have not turned up in large numbers because of the rainfall... in other days, people floods almost every corner of the office," said a neighbour. In responding to the increasing demand of its services, the company plans to expand to all districts of Dar es Salaam, The Citizen has learnt.

Members of the pyramid speak

One of the members of the scheme who identified herself by the name of Lightness Kimaro commended the business, saying it pays well.

"Within a week, I have accumulated about Sh243, 000 and I am optimistic at the end of this week I will be at a position of earning Sh486, 000," noted Ms Kimaro.

Her sentiments was echoed by a small entrepreneur in the city, who said her name was Grace Mapunda, who also added that the business was a solution to the challenge of lack of capital to small entrepreneurs.

"This is a real business... it is not a pyramid scheme as some other people think. So far I have started enjoying the fruits of my labour. Everyone who works hard to create a network is handsomely rewarded," she said, adding that within a week, she had garnered a total of Sh200, 000.

Amwa is under investigation

The Citizen has learn that Mwanza police authorities placed Amwa and two other pyramid schemes operating in the Lake Zone under investigation.

Mwanza Regional Police Commander Ahmed Msangi issued a statement in January this year cautioned Mwanza residents against joining a proliferation of schemes that have mushroomed in the Lake Zone that included Amwa. Commander Msangi liked Amwa to the DECI pyramid scheme that was closed by the Bank of Tanzania in 2009 and its managers arrested after "robbing" unsuspecting Dar es Salaam residents of billions of shillings. "A lot of people have come to file complaints against being cheated of their money by various organisations," Mr Msangi said in a statement issued in January 26, this year.

Mr Msangi said the Police had arrested one Happy Aloyce Mbuya and her seven accomplices who are owners of AQ Power Club which had already collected close to Sh100 million from unsuspecting individuals. The Police had also arrested unnamed number of directors and works of another pyramid scheme known as Bega Kwa Bega Microfinance for swindling people of their money.

"Investigations are ongoing before we can take the culprits to court," Mr Msangi said in a statement adding;

"The Police is working on intelligence reports that indicate that another organisation known as Amwa is also conducting a pyramid scheme," Mr Msangi said.

On Wednesday Commander Msangi told The Citizen through a short message service (SMS) that Amwa's case files were at the hands of the State Attorney Office.

Reached for comment, Ilala Regional Police Commander Salum Hamdani on Wednesday told The Citizen that he had no information about the presence of any pyramid scheme operating under his jurisdiction. "I have received no formal complaints from anyone about the company; this is a new tip for me and I will do a follow up on the matter to find out the truth," noted Mr Hamdani.

He said the Police Force would also investigate to find out whether or not the company was running its business in accordance with their objectives as they registered in Brela.

He warned that pyramid schemes were not allowed in the country and that once investigation are complete, they would act on the matter accordingly.

The Banking Supervision director of the Bank of Tanzania (BoT) Kened Nyoni said he was not aware of Amwa.

"I am not aware of Amwa. We only deal with financial institutions registered by the BoT," said Mr Nyoni.

Amwa denies it is a pyramid scheme

But Amwa maintains that it is not a pyramid scheme like DECI on the grounds that it is a registered company in accordance with the law and that no one is swindled of their money.

"In our case people do not deposit money and harvest more within a short period of time as it was the case to DECI," one of the workers told The Citizen, adding what determines how much one earns is the number of forms sold to others who join the network," the worker said.

DECI which stopped its operations in 2009 was not registered, compelling the High Court to confirm the decision requiring the Bank of Tanzania (BoT) to make arrangements of refunding of its 400,000 customers the money they had deposited, which is estimated at Sh92 billion.

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