Sunday , June 13 2021

Crowdfunding: Africa remains behind



With estimated funding requirements of $ 331 billion, the continent's small and medium-sized enterprises (SMEs) are struggling to find loans. With the advent of crowdfunding, the horizon could become clear, but on the continent, the lack of a regulatory framework is delaying the development of this sector.

In Africa, there are nearly 44 million small and medium-sized enterprises (SMEs) that have difficulty accessing credit. It is estimated that its financing needs are estimated at $ 331 billion. Despite its apparent growth, the traditional banking system has shown its limitations to meet the requirements. In fact, 80% of SMEs have difficulty accessing credit. A situation that limits the development potential of the continent but can solve new forms of financing. This emerges from a podium yesterday in the Crowdfunding Forum in Africa, organized by Participatory Financing Africa and the Mediterranean (Fpam). According to Fpam co-president Thameur Hemdane, "crowfunding or crowdfunding is an important tool for financing the development of the continent". Crowfunding was born in Europe in 2010 and has already proven itself. Mr Hemdane cites the example of the United Kingdom, where this so-called equity financing is developing very strongly. "It accounts for more than 20% of corporate loans and 17% of company own funds, not just an epiphenomenon or a marginalized financial system, but full-fledged financial actors," says Hemdane. Instrument for financing culture, civil society and all kinds of projects, especially projects that pose very important societal and climatic challenges, can provide crowfunding solutions by funding start-up projects, including start-up, and smes, says Hemdane.
The forum, organized by Fpam in collaboration with Jokkolab, aims to promote proven crowdfunding practices on the continent. In the opinion of the panel participants, this means creating a regulatory framework. In this chapter, Laurent Gonnet, World Bank financial expert, points out that talks are underway with the Central Bank on the development of a regulatory framework. It must be said that the stakes are high. By digitizing the continent, one can hope to make big profits in the financial sector of the continent. According to studies, by the year 2025, 400 million new people will be financially involved via mobile phones. This will generate $ 758 billion in new deposits and loans totaling $ 448 billion.
Today there are actors working in this field. In West Africa, when the new fintech is mainly dedicated to payments, the mobilized funds in the south and east of the continent serve primarily to finance the investment. Jean-Louis Traore of Innogence Consulting, a Côte d'Ivoire-based company, cites the example of Nigeria, where the Farmcrowdy platform has supported more than 7,000 farmers through participatory funding.

Bottleneck in financing
If small businesses on the continent are so poorly funded, there are several reasons. However, according to Mr. Gonnet of the World Bank, some bottlenecks have to be addressed. He cites the solvency problems of SMEs and the insolvency administration system as well as the problems of the guarantee. In this regard, he pointed out that financing is more likely to be the property of the owners of assets, and therefore proposes greater involvement of public authorities through the establishment of guarantee funds. For Mrs Valérie Dabady of the African Development Bank (Bad), it is particularly important that we accept that financing is only part of the needs we need. "We have to change our way of working," she says.
[email protected]


Source link