The Youth Chase Riches That Never Come

Apr 6 , 2025
By Ahmed T. Abdulkadir

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It starts innocently enough, usually with a message from an old classmate: “Hey, I've an exciting opportunity for you! Financial freedom, passive income, entrepreneurship. DM me for details.”

Soon, we could find ourselves in a crowded conference hall, listening to a charismatic speaker who claims he “retired in his 20s” thanks to a mysterious business strategy. Cheers erupt, chants echo through the hall, and a slide proclaims, “If you work hard, you too can be rich.”

Welcome to the booming world of multi-level marketing (MLM), which is rapidly gaining traction in an economy struggling to breathe. Companies are attracting young Ethiopians, driven by economic despair and the appealing promise of easy money. A fertile ground for MLM schemes, Ethiopia has become a place where youth unemployment in urban areas picked up around 25pc, limiting access to stable, well-paying jobs. Inflation remains high, wages stagnate, and affordable credit almost non-existent. For many, MLM appears as their only way out of financial distress.

The pitch is compelling: “Work from home! Be your own boss! No experience needed!”

Potential targets are encouraged to invest in products and recruit friends and family to join. Yet, beneath the glossy brochures and motivational speeches lies a layer of truth buried under the marketing noise. Almost no one profits.

If MLM were genuinely profitable, rags-to-riches stories would dominate headlines. Instead, global data paints a grim picture.

The U.S. Federal Trade Commission (FTC) and the Consumer Awareness Institute reveal that about 99pc of MLM participants lose money. To put that figure into perspective, only 85pc to 90pc of people who gamble at slot machines lose money. Statistically, individuals have better odds at a casino than in MLM. The few who make a profit primarily earn through recruitment rather than selling actual products, turning MLM schemes into thinly disguised pyramid structures.

As the saying goes: “The house always wins, and you’re not the house.”

Recently, a young woman approached me on my daily commute through Mexico Square, politely requesting a few minutes of my time. Initially assuming she was a bank clerk recruiting customers - that is to mean depositors - I hesitated. But she insisted it was for research." Remembering my student days, I agreed to help.

The questions began routinely. My name, education, and occupation. Soon, however, they turned unexpectedly personal.

What is my five-year plan? What are my dreams and aspirations?

The critical question arrived before I could fully grasp where this was heading.

Am I ready to achieve financial freedom by building my network?

MLMs rely on an endless stream of new recruits. Young people are particularly vulnerable due to the lack of formal employment opportunities. Many students struggle through high school only to face bleak job prospects after graduation. In this vacuum of genuine economic opportunities, MLMs flourish.

However, the harsh economic reality limits consumer buying power, especially for overpriced MLM products such as herbal teas, miracle water filters, and vague "digital packages." Most households barely afford essential goods, making mass consumption of these costly, low-value items ,unrealistic. The MLM business model becomes unsustainable, ultimately leaving participants in worse financial shape.

Many empty their savings or take out loans to participate, pressured by promises of wealth. Relationships deteriorate as friends and family members are relentlessly pressured into investing. Participants frequently leave stable employment, chasing a fantasy only to discover their new "business" is merely a recruitment cycle. By the time reality hits, their financial situation has worsened greatly. Alarmingly, despite the risks, MLMs remain legal.

The authorities recognise the danger but have struggled with effective regulation. The National Bank of Ethiopia (NBE) issued warnings in 2023, raising the red flag on MLMs' risks. Yet, enforcement remains weak, and MLM companies cleverly evade regulations by labelling themselves as "e-commerce platforms" or "personal development programs." Shut one down, and another quickly emerges under a new guise.

The authorities should enhance regulatory measures to address this growing problem. MLM companies should be required to disclose actual income data and information, detailed refund policies, and explicit business risks. Transparency in these areas would likely dissuade many potential victims. Public awareness campaigns could help reduce MLM participation by educating young people on financial scams and pyramid schemes. Incorporating this education in schools would equip the youth with the knowledge to recognise and avoid these traps.

However, the root cause lies deeper in the weak formal economy. Real change demands more than regulation and education. It requires meaningful economic reforms, including access to affordable credit, effective start-up incubation programs, and better market opportunities. Only genuine and accessible entrepreneurship can provide young Ethiopians with the sustainable financial security MLMs falsely promise.

As long as genuine employment opportunities remain limited, MLMs will thrive, offering illusions of hope. Yet, as the FTC statistic clearly illustrates, MLMs offer no real solution to economic hardship. Instead, they capitalise on desperation, selling dreams instead of products.

The youth need substantial opportunities, not misleading "network-building" schemes. They deserve more than empty promises and hollow motivational slogans. They need — and deserve — a stable, functional economy that works for them. Real financial freedom does not come from recruiting others into risky schemes; it is an outcome of an economy structured to offer opportunities to all, not only to the few at the top of a pyramid.

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PUBLISHED ON Apr 06, 2025 [ VOL 26 , NO 1301]

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