(Ecofin Agency) - Crowdfunding, internet-based collective fundraising model that allows multiple individuals to directly finance (in a traceable manner) projects, is fully expanding across East Africa.
In fact, online crowdfunding platforms have raised in 2015, $37.2 million, in four East African nations: Kenya -$22 million, Uganda - $7.5 million, Tanzania - $4.2 million and Rwanda -$3.5 million. The funding mode thus grew by 112%, 312%, 281%, and 169% respectively in Kenya, Uganda, Tanzania and Rwanda.
Many specialists said crowdfunding’s growth is mostly due to opportunities it provides in terms of financing for startups and other enterprises. According to Alessandro Nava, consultant with the Consultative Group to Assist the Poor, World Bank affiliate, “crowdfunding holds the most promise for helping entrepreneurs and has the potential to become the next big thing for financial inclusion”.
However, Nava adds that “it brings along risks for both borrowers and lenders”. Truly, unlike in western countries, in Africa, crowdfunding is advancing on fragile land as it does not benefit from a fully-dedicated regulatory and legal environment, platforms not legally being deposit nor lending institutions.
Nevertheless, outlook for the participative fundraising model is quite bright. The World Bank estimates that crowdfunding activities globally will raise $96 million by 2025, from $34 million in 2015.