Current landscape of Crowdfunding in Africa and the role of AgarFund in Ethiopia
The Afrik start report defines Crowdfunding as the manner in which a large number of people use online platforms to raise funds. Crowdfunding —or the use of online platforms is to raise money for business ventures from a large base of investors—has been steadily gaining traction in Africa over the past decade. Still, crowdfunding in Africa remains limited compared to other regions.
In 2015/16, Africa-based Crowdfunding platforms raised about $32.3 million, which indicates that Crowdfunding in Africa is at infancy. Most Crowdfunding platforms founded in Africa operate and fund projects within their home countries. Over 75 Crowdfunding platforms have been launched in Africa since 2012.This number includes Crowdfunding platforms prototypes and pilot Crowdfunding platforms. Since online Crowdfunding is a new alternative form of fundraising in Africa, most Crowdfunding platforms focus on gaining foothold and a significant market share within their home country, before planning any regional or Pan-African expansion.
Some of recognized Pan-African platforms are Afineety, M-Changa, Pitch office, Fundasolva, and real estate platform Realty Africa.
Much Crowdfunding activity in Africa is donation-based, but there has been some significant early activity around equity-based and debt-based platforms in South Africa, Kenya and Ghana.
The rapid expansion of mobile technologies in Africa in the last decade is a well-known fact, and indeed, people across Africa are using phones for transactions ranging from common purchases to peer-to-peer and group interactions for different activities. Even though there is less familiarity (and in certain cases, trust) in Africa when it comes to online fundraising as a capital-raising tool, the prevalence of mobile phones could allow for rapid increases in Crowdfunding activity in the context.
In line with this, Crowdfunding platforms subsidize the costs of marketing and promotion by typically allowing entrepreneurs to use the platform for free. The platforms themselves have a built-in user base, and most of the platforms that are currently active in Africa have no subscription costs. Listing a venture on a Crowdfunding platform not only increases exposure to investors, but it also enables charities entrepreneurs and peoples in need to benefit from the platform’s infrastructure (e.g., online presence) and vision and mission recognition.
There has been a steady growth in the number of Crowdfunding platforms in Sub-Saharan Africa, a result of the high demand for capital, the surge in mobile penetration, and the growing African middle class. At the end of 2015, there were 57 Crowdfunding platforms headquartered in Africa, of which 21 were based in South Africa. Funding is slowly spreading across East Africa: Kenya, Uganda, and Zimbabwe had respectively 2 Crowdfunding platforms each. Most of these platforms are designed to serve a local consumer base and tend to support charities and projects that operate in their host country only. Unfortunately, still there is no such initiatives made in our country Ethiopia.
By taking the mentioned issues discussed above, one can easily understand that we step behind in leveraging the benefits of online and system-based Crowdfunding in our country Ethiopia.
Hence, by considering the fertile grounds in our country like
- Our ancient way of life who supports one another in any way of possibility
- Our cultural and spiritual norm who facilitates being together and help one another
- Increasing internet and mobile phone usage penetration trends
- Automated and online payment options available for most local banks where ever we live etc, we need to come up with a solution which will helps us to share and support the peoples in need.
So, our proposed AgarFund Crowdfunding portal assumes to bridge this gap and becomes the first of its kind in pointing out the importance of such initiatives. We also want to contribute to shed light on the Ethiopian Crowdfunding market. We truly believe that Crowdfunding has the potential to democratize access to donations and capital for Ethiopian charities, medical problems, entrepreneurship and start up ideas and more.