There were 57 crowdfunding platforms operational across Africa in 2015, while African crowdfunding projects raised an estimated US$126.9 million, according to aspiring crowdfunding platform Afrikstart.
Afrikstart hopes to become a crowdfunding, training and mentoring platform for African entrepreneurs; with a particular view to empowering youth and female entrepreneurs. Launched in 2013, the platform plans to begin crowdfunding operations over the course of 2016.
The Afrikstart team has released their observations on the African crowdfunding arena, and in their estimation US$126.9 million was raised for crowdfunded projects in 2015 – both through African platforms, and foreign platforms funding African projects.
The data finds 57 crowdfunding platforms based in Africa, with South Africa leading the way with 21 platforms; followed by Nigeria with nine; and Egypt in third place with five.
However, only US$32.3 million of the total funds were raised on African platforms, Afrikstart claims; with US$94.6 million raised on international platforms in the form of donations and loans.
Of the African platforms, Afrikstart claims South Africa’s were most effective, raising US$30.8 million; followed by Egyptian platforms which raised US$842,000; and in third place Nigeria, where local crowdfunding platforms raised US$314,445.
Funds were mostly raised in the form of donations (37 per cent of funds) or on an equity-basis (33 per cent); with rewards-based fundraising, peer-to-peer, and hybrid models all taking on smaller roles, Afrikstart claims.
“Entrepreneurs across Africa have jumped on the crowdfunding wagon, with the clear objective to democratise access to financing in Africa,” Afrikstart says.
The data identifies a number of challenges hindering the expansion of crowdfunding as an alternative funding option, including low Internet penetration, low social media use, and limited funds transfer and payments options across Africa.
The “more pressing” challenge, is the fact that crowdfunding platforms in Africa operate in a “business environment with no legal and regulatory frameworks” to govern crowdfunding.
In addition, Afrikstart cites the low levels of awareness as a hindering factor to the expansion of crowdfunding on the continent.
“Crowdfunding is a major vector of African self-empowerment. Through crowdfunding, Africans have the power in their hands. The power to choose and fund social causes and economic initiatives they care about. The power to set and drive their own social and economic agenda,” Afrikstart concludes.