What you need to know:
- Mr Mwiraria was eventually left with dead stock and too broke to afford campus accommodation.
- Mr Mungai Kihanya, a corporate trainer, says multi-level marketing is modelled on pyramid schemes.
Multi-level marketing hardly conjures up positive images in the minds of most Kenyans.
And with good reason, as most have felt the sting of broken dreams that consisted of opulent houses, German cars, luxury holidays and enviable amounts of money.
Mr Tom Mwiraria was introduced to GNLD Kenya, a multi-level marketing company, by a friend when he was a second-year university student in 2007.
“She was in the company of a well-to-do man and they took me to a nice hotel in Meru where the man entertained me with tales of financial globe-trotting, driving big cars and owning homes in Nairobi’s leafy suburbs, I was sold,” he recalls.
He was struggling financially so he thought this would be his route to financial freedom. “It cost Sh3,600 to join. I spent another Sh15,000 on products that I was to use and sell too. I recruited 36 of my fellow students,” Mr Mwiraria says.
He never recouped his money. Mr Mwiraria was eventually left with dead stock and too broke to afford campus accommodation, forcing him to move out of the school into a crumbling hut in the village.
“My quick fix became a quick ride down to poverty. My grades in school tanked too as I spent too much time marketing the products. My biggest pain is that when they come to you, everything is stage-managed,” he says.
Mr Mwiraria, now in his mid-thirties, says that in the end he learnt to be wiser and more cautious.
Ms Teresa Maina’s story takes a similar trajectory. The organisational systems consultant, who’s in her late thirties, was recruited into Forever Living, another multi-level marketing company, by an acquaintance.
“I parted with Sh40,000 as that is what was needed initially to join. This came with a package of products-from roll-ons to toothpaste to supplements, which we were supposed to use and sell,” she says.
Ms Maina adds that while she benefited immensely health-wise from one of their detoxing products as she lost weight and her skin glowed, she can’t say the same of her financial health.
“The tricky part is that they don’t tell you how hard it is to sell these products. I bought into the idea of financial freedom and was also drawn in by the allure of big cars and holidays abroad, but this was never to be.
"It had taken three months of convincing for me to join in May 2015, but three months down the line, I gave up,” she says.
She adds that the money gained from selling is divided between the recruiter and the recruited.
“Money comes through recruiting, but it’s simply not workable. I tried to convince some people in my circles to join, but Sh40,000 is simply out of the league of many people,” Ms Maina adds.
Mr Mwiraria and Ms Maina’s sentiments are echoed by many Kenyans who have seen their financial freedom dreams nosedive almost as soon as they joined multi-level marketing schemes.
But Mr Paul-Peter Otieno’s experience with multi-level marketing has been rewarding. So what did he do differently?
“People will be cheated when they’re lazy and don’t take time to study and understand how it works. They just listen to what they’re told and make decisions based on that. I got introduced to GNLD by trusted friends.
“Yes, I went for presentations where there were exaggerations made about benefit, but I looked for the knowledge myself on the internet and in books,” says the 38-year-old trainer and ICT consultant, who has also authored a book titled Live Your Dream in 7Ds.
He joined GNLD in 2010 and by 2013 he says he was making Sh1.5 million per year in bonuses alone. He acknowledges that one thing which haunts multi-level marketing is falsehood.
“Multi-level marketing is built on networks and integrity. I had developed a training model that worked, but some of the trainers started lying to prospective members and at some point, I let the business fall and decided to start afresh. From 2013 to date, I’ve been making about Sh200,000 per year in profits and bonuses,” he says.
He says that apart from building his wealth, he also benefited from the various trainings; he has travelled the world, networked and improved his health through their products.
“Multi-level marketing is simple and rewarding if you do what you are supposed to do,” he concludes.
Mr Mungai Kihanya, a corporate trainer and the brains behind the "World of Figures" column in the Sunday Nation, which looks at common, everyday phenomena from an analytical angle, says multi-level marketing is modelled on pyramid schemes.
“In a typical pyramid scheme, you are asked to buy a certificate containing five names at the cost of, say, Sh500. The name of the person selling this paper appears at the bottom of the list.
"You are then asked to send another Sh500 to the coordinator of the scheme and Sh1,500 to the person appearing at the top of the list. The total investment comes to only Sh2,500.”
He does not think multi-level marketing businesses are a scam. “At the end of the day, a person walks away with a product or a service. It only becomes a challenge when you buy with the intention to sell. Most of the time the products are priced way above the market price. Because they can’t sell, some people start calling it a scam.”