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Africa, an Eldorado for crowdfunding?

February 6, 2017

Newsletter February 2017

Africa, an Eldorado for the crowdfunding?

What is the crowdfunding?

Everyone and therefore a crowd (crowd) has a certain funding authority (funding). This phenomenon has been growing in popularity for the last ten years. The expression crowdfunding, whose main translation in French is participatory funding, actually reflects different alternative financing methods.

The professionals of the banking and financial sector as well as the academics agree today to say that the term crowdfunding brings together four major families of funding:

1-The Gift
2-The reward
3-The loan
4-taking ownership

In the first two cases, financing a project by a gift or in exchange for a reward is for the investor a way to participate in a project to which he has a particular interest. This is the case for donations to charitable or humanitarian associations, requests for promotional items or coupons, or even pre-purchase of a product that is being implemented.

The other two forms of "participation", loan financing (crowdlending) and investment (crowdequity), are more contractual. As part of a loan, the sums advanced by the contributor must be reimbursed (with or without interest). In the context of an investment, the Crowdfunder financially supports a project in return for a stake (shares, bonds, or other shares).

African mutual aid.

These practices have nothing revolutionary in itself.
The case of Africa is particularly interesting, we know all traditional shipments of money from Africans from abroad to their families left in the country and/or "tontines", informal practices based on values of solidarity and link Social.

This system of self-help, rooted in the culture of African communities, represents a kind of participatory funding.
Tontine is therefore a known device that can serve as a support and promote the implementation of crowdfunding projects in Africa.

Africa, the continent of SMS Funding?

The major challenge facing the crowdfunding in Africa is the technological potential for the diffusion of investment opportunities. It is a matter of reinventing the tontine.

To do this, a track is to be preferred, the SMS funding.
This funding system builds on the popularity of mobile telephony in Africa.
SMS funding uses "over-taxed" numbers, allowing investors to transfer their contributions directly to project holders and removing the risks associated with the transport of species incurred up to then with the tontiniers system. Classic.

Crowdfunding platforms for Africa.

From now on, Africa-oriented platforms allow young entrepreneurs to develop their activities on the spot without leaving the family and the country.
International institutions and other donors have long tried to solve the challenge of entrepreneurship in Africa through multiple loans and AIDS. At the same time, all Africans who have gone abroad have finally become a significant source of income. In fact, in 2015, the money sent was about 70 billion million (a figure that exploded over the last 10 years).

But now, several crowdfunding platforms are betting on these diaspora donations to fund the projects of African young entrepreneurs. Agriculture, agri-food and its infrastructure are the most funded sectors via crowdfunding in Africa.

Afrikwity and Isahit together for digital work.

#GetDigitalWork
#GiveDigitalWork
#DigitalImpact

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