VZCZCXRO5755
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHDR #0348/01 1491049
ZNR UUUUU ZZH
R 291049Z MAY 09
FM AMEMBASSY DAR ES SALAAM
TO RUEHC/SECSTATE WASHDC 8544
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHJB/AMEMBASSY BUJUMBURA 2892
RUEHKM/AMEMBASSY KAMPALA 3423
RUEHLGB/AMEMBASSY KIGALI 1348
RUEHNR/AMEMBASSY NAIROBI 1284
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 04 DAR ES SALAAM 000348 
 
SIPDIS 
 
DEPARTMENT FOR AF/E JLIDDLE; INR/RAA FOR FEHRENREICH, AF/EPS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PGOV TZ
SUBJECT: FALL OF DECI PYRAMID SCHEME BREEDS ANGER, UNCERTAINTY 
¶1. Summary and Comment. In April, the GOT shut down an alleged 
pyramid scheme, the Development Entrepreneurship Community 
Initiative (Deci), which had attracted approximately 700,000 
 
Tanzanian investors and USD 10 million since 2006.  The government 
closed Deci offices nationwide and froze its assets after a series 
of news reports alleged that the enterprise had been operating 
illegally.  The scheme promised members 200 percent returns on 
investment in as little as 8 weeks, but never revealed its 
profit-making formula.  Citing affiliation with the Pentecostal 
Churches of Tanzania, Deci claimed its strategy was "not of the 
human mind, but was established using the wisdom of God."  Until the 
recent government intervention, Deci members were happily pocketing 
returns and the number of members was growing steadily. 
Subsequently, as investigations indicated that Deci's holdings were 
insufficient to repay investors, many Tanzanians lined up at Deci 
offices anxiously awaiting final word on repayment.  Investors 
expressed anger at GOT intervention in what, from their perspective, 
was a legitimate and profitable enterprise. 
 
¶2. The Deci scandal will almost certainly result in devastating 
financial losses for many already impoverished Tanzanians.  It will 
also mean a loss of confidence in the Government of Tanzania by 
investors who blame the GOT either for interfering in a successful 
poverty alleviation program or for not protecting them from a 
predatory and illegal enterprise.  Further, the Deci debacle 
highlights the risk in any financial dealings in Tanzania.  Lack of 
education along with limitless trust in religious and other leaders 
led 700,000 Tanzanians to invest their savings in a scheme with no 
obvious profit-generating mechanism.  Despite a very similar scheme 
in neighboring Kenya just one year prior, the GOT either failed to 
notice Deci altogether or was unwilling to intervene sooner.  A 
recent news article asserted that the Bank of Tanzania is currently 
investigating a number of potential pyramid schemes, suggesting 
increased attention to the matter.  It remains to be seen, however, 
whether these investigations will lead to punitive or preventive 
actions.  The Deci case also shows that Tanzania's free press and 
investigative reports can move the reluctant and sometimes 
inattentive government to action.  Investigative reports in local 
media have increased more than seven-fold since 2007 following 
intensive USG efforts to train hundreds of journalists in 
responsible investigative reporting techniques.  End Summary and 
Comment. 
 
The Rise and Fall of Deci Tanzania 
----------------------------------- 
¶3. In 2006, members of the Assemblies of God Pentecostal church in 
Dar es Salaam received fliers informing them of a promising 
investment opportunity.  The Development Entrepreneurship Community 
Initiative (Deci) of Tanzania, run by the Jesus Christ Deliverance 
Church, announced a "poverty eradication initiative" to foster 
entrepreneurship and offer access to finance to the poorest of the 
poor - those without access to the traditional banking sector. 
Investment in Deci promised a 200 percent return in 8 to 16 weeks, 
depending on the size of the initial investment.  Tsh 10,000 
(currently approximately USD 7.70) would double in as little as 8 
weeks while Tsh 120,000 would mature to 240,000 in 4 months. 
 
¶4. Deci Tanzania set up its headquarters just down the road from the 
Assemblies of God church in Mabibo, one of the poorest neighborhoods 
in the city.  Over the next three years, Deci offices sprang up in 
18 regions nationwide and attracted an estimated 700,000 members. 
Cleverly leveraging both biblical and agricultural terminology, Deci 
asked members to "sow" their "seeds" in order to "harvest" or "reap" 
the rewards.  Most individuals began by sowing small amounts - 10 to 
20 thousand shillings - but, as they harvested regularly (all the 
while leaving their initial investment deposited), they gained 
confidence and began sowing increasingly large amounts, sometimes 
six months to a year's worth of income.  Many also reinvested their 
earnings.  Simultaneously, members' success in harvesting rendered 
them advertisements for the Deci brand and new members flocked to 
branches to take advantage of the scheme. 
 
¶5. In March 2009, local newspapers began reporting that Deci might 
be a pyramid scheme and was rumored to not be properly registered 
and licensed through the Tanzanian government.  Within weeks, the 
story was making front page news daily. During the first week of 
April, the Bank of Tanzania issued warnings that the scheme was 
illegal and bound for collapse.  Prime Minister Pinda also denounced 
the scheme claiming that Deci had collected Tsh 14 billion (USD 10 
million) since beginning operations but had less than 2 billion in 
the bank.  Deci leadership worked to counter the accusations, 
claiming their operations were sanctioned by the Bank of Tanzania 
and the Business Registration and Licensing Agency (BRELA), and 
noting that Deci had created more than 400 jobs in Tanzania, reached 
more than 700,000 members and had paid taxes amounting to Tsh 120 
 
DAR ES SAL 00000348  002 OF 004 
 
¶1. Summary and Comment. In April, the GOT shut down an alleged 
pyramid scheme, the Development Entrepreneurship Community 
Initiative (Deci), which had attracted approximately 700,000 
Tanzanian investors and USD 10 million since 2006.  The government 
closed Deci offices nationwide and froze its assets after a series 
of news reports alleged that the enterprise had been operating 
illegally.  The scheme promised members 200 percent returns on 
investment in as little as 8 weeks, but never revealed its 
profit-making formula.  Citing affiliation with the Pentecostal 
Churches of Tanzania, Deci claimed its strategy was "not of the 
human mind, but was established using the wisdom of God."  Until the 
recent government intervention, Deci members were happily pocketing 
returns and the number of members was growing steadily. 
Subsequently, as investigations indicated that Deci's holdings were 
insufficient to repay investors, many Tanzanians lined up at Deci 
offices anxiously awaiting final word on repayment.  Investors 
expressed anger at GOT intervention in what, from their perspective, 
was a legitimate and profitable enterprise. 
 
million. 
 
¶6. Despite the controversy, members continued to deposit and collect 
funds during the first weeks of April.  Deci members rallied around 
the enterprise.  At a 2,500 person rally at a fairground in Dar es 
Salaam, members held placards condemning Government efforts at 
subverting a legitimate and profitable enterprise.  Some pastors 
urged a moderate approach, requesting that the government not close 
down Deci but work with its leadership to ensure its legality and 
survival.  While Deci claimed it was supported by the Bank of 
Tanzania, the Bank, in turn, argued that it was registered as a 
microfinance institution and could legally lend but could not take 
deposits.  [Note: It remains unclear what Deci's legal status was or 
is.  BoT officials have not released any documentation. End note.] 
 
¶7. Amid growing fears either of Deci's imminent collapse or a 
government intervention, members started withdrawing funds.  On 
April 15, Deci closed its offices nationwide.  As members waited in 
long lines outside of closed offices, some low-level violence 
occurred when frustrated members roughed up a Deci employee and 
several journalists.  Days later, Deci officials announced that they 
would soon begin refunding money.  Almost immediately, however, 
reports confirmed that repayments could not begin as the Bank of 
Tanzania has frozen all Deci assets.  Deci reportedly had only one 
official bank account containing less than Tsh 2 billion while other 
money was being siphoned into the personal accounts of Deci leaders. 
 On May 9, the Minister for Finance and Economic Affairs announced 
that no deposits would be returned and no accounts unfrozen pending 
further investigation by the Government.  Newspapers report that a 
Task Force was set up to conduct the investigation; however, it is 
unclear what the status of its report is and when Deci members might 
recoup their investments. 
 
The Poor Get Poorer 
------------------- 
¶8. Speaking with Econoff at the Assemblies of God Church near 
Mabibo, a group of five women, all Deci members, revealed that they 
had each deposited somewhere between Tsh 500,000 and 800,000 with 
Deci, amounts that accounted for approximately six months income or 
several years of savings.  None of the women had begun investing 
until 2008 or 2009 because, at first, the scheme sounded too good to 
be true.  However, after witnessing their friends and neighbors 
build houses, send children to school, and start small businesses 
with Deci earnings, they became convinced that their fears were 
unfounded and that they were losing out.  Ironically, being the most 
recent investors who have had little or no chance to harvest, they 
will become the biggest losers if, as expected, Deci is unable to 
make repayments. 
 
Investment Secret, Divine Intervention 
--------------------------------------- 
¶9. From the beginning, Deci's profit-generating mechanism was 
shrouded in mystery and prevarication.  Quoted in local newspapers, 
Deci leadership argued that they could not reveal the scheme's 
"formula" and attributed its success to the fact that it was not 
conceived of the human mind but, rather, was established and run 
using the wisdom of God. When asked if they knew how Deci was making 
such impressive profits so quickly, the Deci members in Mabibo shook 
their heads and responded that they didn't know but had heard 
various rumors.  One woman said she heard it was through work with 
"foreign investors," while another said she heard that the seeds 
planted by very rich individuals were gaining interest enough to pay 
the harvests of everyone else.  Not understanding exactly how the 
scheme worked did not seem odd to them at all - they placed trust in 
those who they thought "knew better."  As the first news of the 
miraculous scheme came via the Christian community - even from some 
 
DAR ES SAL 00000348  003 OF 004 
 
¶1. Summary and Comment. In April, the GOT shut down an alleged 
pyramid scheme, the Development Entrepreneurship Community 
Initiative (Deci), which had attracted approximately 700,000 
Tanzanian investors and USD 10 million since 2006.  The government 
closed Deci offices nationwide and froze its assets after a series 
of news reports alleged that the enterprise had been operating 
illegally.  The scheme promised members 200 percent returns on 
investment in as little as 8 weeks, but never revealed its 
profit-making formula.  Citing affiliation with the Pentecostal 
Churches of Tanzania, Deci claimed its strategy was "not of the 
human mind, but was established using the wisdom of God."  Until the 
recent government intervention, Deci members were happily pocketing 
returns and the number of members was growing steadily. 
Subsequently, as investigations indicated that Deci's holdings were 
insufficient to repay investors, many Tanzanians lined up at Deci 
offices anxiously awaiting final word on repayment.  Investors 
expressed anger at GOT intervention in what, from their perspective, 
was a legitimate and profitable enterprise. 
 
religious leaders - an element of blind faith has been intermingled 
with the Deci brand from the outset.  Deci officials were 
unavailable for comment.  Reverend Jackson Mutaresi, a Deci Board 
Member and the official who the Mabibo residents referenced as 
representing Deci interests in their community, has reportedly been 
arrested. 
 
¶10. Even Deci employees were not privy to the secret.  Dominica, a 
middle-aged mother of four who worked as a "promoter" for Deci, said 
she was never told how the scheme worked and was almost never asked 
the question by any of her recruits.  Her promotion materials 
included only registration forms and a sample schedule of payments. 
She herself was satisfied that it was through the "vision of the 
Deci leadership" that the money was growing.  As a recruiter, 
Dominica was paid 2.5% of every investment she brought in.  Pleased 
with her new work, she found jobs for both of her daughters as 
tellers at Deci branches.  As tellers, her daughters did not know 
Deci's secret formula, but were aware of the need for discretion. 
Dominica shared the contents of one of her daughters' Deci 
employment contracts which read, "While with us always be LIP-TIGHT. 
 Please be advised to abstain from releasing any information which 
will be detrimental or dangerous to our operations." 
 
Second Time's the Charm? 
------------------------ 
¶11. This is not the first time that East Africa has heard of Deci. 
In 2007, a similar scheme called Deci Kenya collapsed owing 
investors USD 7.8 million.  While a connection between the two 
schemes has not been proven, their similarities - such as an 
association with the church, the name, and the stated mission of 
poverty alleviation - suggest they are related.  It is unclear 
whether GOT officials knew of Deci Kenya's collapse.  Our GOT 
contacts would not discuss Deci, nor has the press elicited GOT 
comment about why Deci was permitted to remain in operation for so 
long.  In any case, the majority of Tanzanian investors in Deci had 
not heard of Deci Kenya until local newspapers broke the story. 
Those who had heard of it - like Dominica - had been assured that 
Deci Kenya failed because its members were not "faithful before 
God." 
 
Government Takes Blame 
---------------------- 
¶12. Although all indications point to Deci Tanzania's being a Ponzi 
scheme, among investors the most controversial issue surrounding 
Deci is the GOT's decision to close it down.  Some theories 
propounded by unhappy investors include that Tanzanian leadership 
was angry that traditional banks and investment opportunities would 
lose out to Deci; and that the Government was angry because it was a 
Christian, and not Muslim, organization. [Note: Although Deci claims 
affiliation with the Pentecostal church, members in Mabibo claimed 
it was not unusual for Muslims also to be members.] 
 
¶13. Like the women in Mabibo, the majority of Deci members are poor 
individuals with limited education who belong to a community of 
faith.  Even though they may have had their doubts about Deci at 
first, having witnessed the success of others, having been assured 
by Deci leadership that the venture was sanctioned by the Government 
of Tanzania, and having been encouraged to invest by local religious 
leaders, their hesitations were allayed and the desire to take part 
in a seemingly miraculous scheme won out.  Now, as the "harvests" 
have come to an abrupt stop, most Deci members are focusing their 
anger at the Government rather than at Deci leadership.  They argue 
that Deci had been in operation for nearly 3 years and that, if it 
were going to collapse, it would have done so already.  Explaining 
to the women in Mabibo the rob-Peter-to-pay-Paul nature of such 
ventures, Econoff was met with wide-eyed stares and shaking heads. 
 
DAR ES SAL 00000348  004 OF 004 
 
¶1. Summary and Comment. In April, the GOT shut down an alleged 
pyramid scheme, the Development Entrepreneurship Community 
Initiative (Deci), which had attracted approximately 700,000 
Tanzanian investors and USD 10 million since 2006.  The government 
closed Deci offices nationwide and froze its assets after a series 
of news reports alleged that the enterprise had been operating 
illegally.  The scheme promised members 200 percent returns on 
investment in as little as 8 weeks, but never revealed its 
profit-making formula.  Citing affiliation with the Pentecostal 
Churches of Tanzania, Deci claimed its strategy was "not of the 
human mind, but was established using the wisdom of God."  Until the 
recent government intervention, Deci members were happily pocketing 
returns and the number of members was growing steadily. 
Subsequently, as investigations indicated that Deci's holdings were 
insufficient to repay investors, many Tanzanians lined up at Deci 
offices anxiously awaiting final word on repayment.  Investors 
expressed anger at GOT intervention in what, from their perspective, 
was a legitimate and profitable enterprise. 
 
In that case, they said, the Government is still to blame because it 
failed to protect them from the outset. 
ANDRE