MatchBox publishes commissioned and self-initiated researches on topics relating to social finance and impact investing. We engage with leading thinkers on the most pressing issues facing our clients.
Featured: “Crowdfunding Potential for…..”
The annual in-depth report ‘Crowdfunding Potential for Nigeria’ initiated and researched by MatchBox is based on World Bank standards on the state of crowdfunding and entrepreneurship in developing countries.
Nigeria is Africa’s fastest growing economy. Anyone who spends time in the country knows that it’s home to exciting trends and developments in capital and fintech. Lagos is the largest city in Africa of 20 Million people. It is the tech giant of the continent and home to several billion-dollar tech unicorns. It is well-known for its inspiring and ambitious entrepreneurs.
The goal of the report is to showcase the entrepreneurial ecosystem in Nigeria and to add to the discussion on crowdfunding in 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. The full 2017 report can be downloaded here.
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International Media coverage:
‘Crowdfunding is a global phenomenon but it is obviously evolving at different speeds in different countries. Africa is one region where the new form of finance can be utilized to benefit the economy. A recent report published by MatchBox Consultancy and the CrowdfundingHub highlights a single country in Africa: Nigeria.’
‘A new report has been published today, assessing the development of the crowdfunding sector in Nigeria. The report – titled Crowdfunding Potential for Nigeria 2017 – shows that the country has certain elements in place, making it possible to create an effective crowdfunding industry in the West African country. The report shows that these elements are: a large, fast-growing population; widespread mobile and internet connection; strong social usage and a great network of family and friends; a booming entrepreneurial scene; and effective payment solutions.’
‘The Securities and Exchange Commission (SEC) of Nigeria’s ban on equity crowdfunding “is seriously slowing down” the introduction of crowdfunding in the country. The Crowdfunding Potential for Nigeria report released last month, says crowdfunding has significant potential in the country, but that the SEC’s ban issued in August last year has stifled the setting up of crowdfunding platforms.’
‘Researched and written by MatchBox Consultancy, the Nigeria report was created to determine the crowdfunding potential for Nigeria where a handful of platforms have emerged to provide financing services.’
Executive Summary Crowdfunding Potential for Nigeria 2017
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 growing 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 growing 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 additional capacity.
Download the full report here.