The Securities and Exchange Commission (SEC) Nigeria has said that the operationalization of Crowdfunding will accelerate the Financial Inclusion agenda in Nigeria, while increasing the quantum of investible funds by unlocking the untapped capital in the economy.
The Executive Commissioner Operations SEC (Nigeria), Mr. Dayo Obisan stated this at a webinar with the theme ‘Accelerating Financial Inclusion Through Crowdfunding’.
Obisan said the event hosted by the SEC was the first in a series since the Commission’s Rules governing Crowdfunding became effective in January, 2021 with the main objective of ensuring ‘investor safety’, stressing that it is aimed at providing a platform for knowledge and experience sharing among participants.
According to him, the event is also to raise awareness of participants, and indeed Nigerians, on Crowdfunding as a funding mechanism for Start-ups and MSMES, to enlighten them on experiences and lessons on Crowdfunding from other jurisdictions as it an alternative way of investment and financing of businesses.
He described Crowdfunding is a new phenomenon growing popularity in Nigeria adding that the platform is an innovative source of finance which provides MSMEs, Start-ups the avenue to raise capital from the crowd (populace) by harnessing the power of the internet.
He explained: “In realization of the potentials of Crowdfunding, the Commission’s Rules issued in January 2021, has taken concrete steps to improve the regulatory framework for Crowdfunding by introduction of the operational framework between the fundraisers and the investing public in Nigeria.
“The framework amongst others makes it mandatory for any investment-based Crowdfunding to be operated only by Crowdfunding Intermediaries through issuance of investment instruments. This will no doubt provide an additional opportunity for MSMES, Start-ups and the general public to quicker fundraising options.
“It is strongly believed that the Capital Market has a leading role to play in this regard by collaborating with relevant stakeholders to map out strategies for deepening the capital market through Financial Inclusion as well as continuous enlightenment programs with focus on Collective Investment Schemes.
“Certainly, this Roundtable discussion promises to be exciting. The Faculty gathered here are experts in various fields and set to impact knowledge on Understanding Crowdfunding, its Regulatory Framework in Nigeria and the Potentials of Crowdfunding in accelerating retail participation in the capital market.
“I encourage every participant to take advantage of this educative forum as I have no doubt that this subject will lead to the birth of new ideas that will equip us with the requisites knowledge and skills to achieving financial inclusion through Crowdfunding” Obisan added.
In her remarks, President African Crowd Funding Association, Mrs. Elizabeth Howard, described Crowdfunding as an umbrella term that explains the use of small amounts of money, obtained from a large number of individuals or organisations to fund a project, a business or personal loan and other needs through an online web based platforms.
The Chief Operating Officer National Association of Securities Dealers, Mr. Eguarekhide Longe, pointed out that Crowdfunding could aid capital mobilisation for economic growth and development.
He listed some of the benefits for investing in Crowdfunding as including retention of ownership entities by founders since investments are not concentrated as is the case with Venture Capita or Private Equity; project promoters use the capital raising campaign as a marketing tool to assess the acceptability of their concepts; and investors can be part owners of an enterprise by investing a minute amount of capital – Risk reduction.
Crowdfunding platforms are websites that enable interaction between fundraisers and the crowd. It is in line with this that Crowdfunding has garnered a lot of attention from regulators across jurisdictions because of its potentials to further financial inclusion efforts.
