Worldwide, crowdfunding raised billions of euros. A fraction of this has been funded in Africa. This report provides an insight into how Nigeria has reacted to this trend and how the market is developing. Nigeria is one of the fastest emerging markets in the world and one of Africa’s leading economic markets. Crowdfunding platforms are slowly entering the market, but regulatory restrictions and political instability reduce the growth of the crowdfunding industry in Nigeria.
Highlights of report
- Nigeria is one of the fastest emerging markets in the world and Africa’s nr 1 economy. The country is at the beginning of an exciting growth of tech start-ups.
- Crowdfunding platforms are slowly entering the market. At the start of 2017, 4 Nigerian based platforms were online. This is relatively limited.
- The African continent accounts for about 83,2 Million USD crowdfunding in 2015. In Nigeria, $7-8 Million was raised by crowdfunding.
- The banking system is moving ahead of its counterparts in other emerging markets. It provides a promising infrastructure for crowdfunding in Nigeria, with innovative mobile banking apps.
- Nigeria suffers from great political instability. For entrepreneurs, it ‘s difficult to anticipate whether existing policies or regulation will change. In addition, corruption and multiple taxes make it a challenging environment.
- In August 2016, the Securities and Exchange Commission of Nigeria (SEC) announced that equity crowdfunding is now banned in Nigeria until further notice. Donation based crowdfunding is still legal.
- Other major concerns according to this report are lack of trust and access to credit facility. These challenges will not be easy to tackle, yet many ambitious entrepreneurs are utilizing innovative strategies to overcome these obstacles.
- Moving forward, donation and reward based crowdfunding should be fostered as a first step towards crowdfund investing. They have successfully paved the way for equity based crowdfunding in other regions.
- Other initial steps include: Platforms bundle forces and work on new legislation with the current government. A regulatory framework is also essential to promote capital formation while protecting investors. External linkages in US and EU can be used for
Crowdfunding can be a powerful tool for social change in developing countries.
In Nigeria, home of millions of young entrepreneurs, crowdfunding could be a great tool to boost organisations and individuals. The crowdfunding ecosystem is generally built on availability of Internet, social media and the ability to transfer funds in a standard based way, with mobile payments and online funds transfers. The banking system in Nigeria is moving ahead of its counterparts in other emerging markets. It provides a promising infrastructure for crowdfunding, with innovative mobile banking apps. However, regulation and trust are also a big factor in the crowdfunding ecosystem of a country. Nigeria suffers from great political instability. For entrepreneurs, it ‘s difficult to anticipate whether existing policies or regulation will change. In addition, corruption and multiple taxes make it a challenging environment.
On top of that, it was announced in 2016 that equity crowdfunding is now banned in Nigeria until further notice. Donation based crowdfunding is still legal.
The goal of this report is to determine the crowdfunding potential for Nigeria and to add to the discussion on crowdfunding in Nigeria and West Africa.
It is intended to be a practical document for those interested: crowdfunding platforms, investors, entrepreneurs seeking funding, regulators and other potential stakeholders. The aim is to advance the field of crowdfunding as a part of Alternative Finance, as an alternative to traditional funding from banks and governments. Nigeria is a huge market with an incredible amount of potential if one gets the formula right.
Download full report here: Crowdfunding Potential for Nigeria 2017 - CrowdfundingHub.pdf (245 downloads)