Crowdfunding in Africa – The Story So Far
Crowdfunding in Africa has always existed, perhaps not in the manner it is popular today. In Africa, there is a historic tradition of communities getting together and supporting individuals who are in a financial emergency.
Crowdfunding is known by several different names in Africa. In Ghana, we have the Susu system, in Mali, there is the Tontine system and in South Africa, we have a tradition of stock fairs, called Stokvels, where businesses compete for small or micro investments from ordinary people in town or village fairs. Africa has a culture of culture of supporting people with great ideas through financial contribution by communities.
The challenge is to connect the traditional African crowdfunding methods with modern day crowdfunding ideas taken from the West. The goal for Africa is to make crowdfunding its own, not to copy ideas blindly from the West, such as creating something like Kickstarter, because that won’t work.
There are just a few crowdfunding sites in Africa that are worthy of mention. 3 of them are based in South Africa - StartMe, FundFind and ThundaFund. There is one in Nigeria – StartCrunch, and one in Kenya - M-Changa. Ghana has a crowdfunding platform as well, called SlizeBiz.
Each of these sites have fought hard to find investor or to find angel investor. It hasn’t been an easy going for them as Africa has several major challenges, such as the fact that a majority of Africa’s population does not have access to the internet.
So modern-day crowdfunding in Africa is pretty much a work in progress and is still in its beta stage. Crowdfunding in Africa is yet to develop a startup financing culture like the one we have in the West and in Israel. So the crowdfunding platforms in Africa have to use their own unique strategies that are better placed to take advantage of Africa’s unique strengths, while navigating the obstacles in the way.
The best way for crowdfunding to succeed or for a crowdfunding campaign to go viral is through the social media. Crowdfunding is an intensely interactive activity where the fund raisers should be in constant contact with investors, answer questions and develop relationships. That’s why social media plays the most important role in the success of a crowdfunding campaign.
However, because of the fact that a large section of Africa’s population is illiterate and internet is not as widespread as elsewhere in the world, social media is not as powerful in Africa as it is in other parts of the world. South Africa has only 8.5 million internet users and Kenya just 12 million.
Only a miniscule part of the population in these countries uses Facebook or Twitter. In Nigeria, things are even worse – just 2 million people use Facebook in a country with a population of 173 million. This is just an indication of how hard it is for crowdfunding to take off in Africa. But the use of the mobile phone is widespread in the African continent and it is believed that 50% of the people in Africa use mobile phones.
So, crowdfunding platforms in Africa have made the mobile an integral part of their marketing, sending SMS messages to people about various fundraising campaigns and encouraging them to get involved. For example, Kenya’s M-Changa, uses an SMS service to promote and remind friends and backers of the projects running on its platform.
So, African crowdfunding sites are making the best of what they have got and are using several innovative techniques to survive in a tough environment. Regardless, the enthusiasm of the crowdfunding community in Africa is very infectious, and there is an unmistakable sense of optimism in the air, which is an excellent starting point.
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