A Comparative Analysis of Africa and Chinese Crowdfunding Markets

Advances in E-Business Research

The utility of crowdfunding in promoting sustainable development is beyond doubt due to its popularity in the Global North. The application of this concept in the Global South, especially in Africa, is illunderstood and questionable considering the high levels of corruption, poverty, and poor governance. Applying the concept of crowdfunding in Africa then becomes problematic. The chapter aims to undertake a critical analysis of the concept of crowdfunding and its sustainability in advancing the success of urban-based projects in African cities. What can (or should) be the defining pillars for sustainable and inclusive crowdfunding? What are the known (or even unknown) limits and prospects to initiatives like crowdfunding? What are the answers to the colonial legacy derived scepticisms about self-worth and context? What options do the African cities have? The chapter engages a mix of methodologies including literature review, document review, and case studies. Thematic content analysis is applied in building up the discourse. From the study, five critical observations emerge.

Open Journal of Business and Management , 2021

In developing countries, the topic of crowdfunding is still in its infancy because Europe; Asia and North America have monopolized almost all the researchers’ attention. Nevertheless, the number of scholars stressing the fact that investigations should be conducted on the economic impact of crowdfunding in developing countries where financial systems are still struggling is incredibly increasing. But before getting to that point, as Gajda and Walton stated, “An analysis of primary and secondary data; in-depth assessment of live projects and statistical analysis could provide more insight (…) how to make crowdfunding more accessible to entrepreneurs in the developing world” (Gajda & Walton, 2013: p. iii). Drawing on this and the fact that none of the extant literature about crowdfunding in Africa has provided statistical assessment of existing platforms on the continent; how much crowdfunding has been adopted and sustainably implemented across various region on the continent, this paper’s main goal is to depict and describe the current situation of crowdfunding in Africa. Known as proven and accepted methods used for growing topics in the field of entrepreneurship, this paper used exploratory and descriptive methods. This paper provides everyone in need of clear understanding of crowdfunding’s origin; how it evolved; its level of penetration and use in Africa, with the necessary information. The study came to conclude that in West and North Africa only 22% and 33% of the platforms created in the span of 2012 to 2020 are still operating. East Africa and South Africa are doing far better as respectively 70% and 55% of their crowdfunding platforms are still operating. The study also found that French Speaking countries struggle a lot in implementing and sustaining crowdfunding platform. West Africa performs very poorly as rarely the projects listed on the scarce platforms still operating manage to gather more than 2% of their funding goals. The study also came to the conclusion that by May 2020, 64% of the crowdfunding operating in Africa are foreign based. Keywords: Crowdfunding, Entrepreneurship, Funding, Equity, Debt, FinTech, Equity Gap, Africa, Economic Development, Developing Countries

In the recently published World Bank Report on Crowdfunding (infoDev 2013), China has been predicted great potential: By 2025, Chinese households might invest up to US$ 50 billion per year into Crowdfunding projects. However, as the authors of this report have admitted they based their approximation primarily on economic data, and thus China’s prospective amount of crowdfunding capital may actually be much lower. Not least for international crowdfunding platforms, the development of crowdfunding in the Chinese market is of considerable importance. This paper assesses the World Bank Report’s procedural methods and their applicability to China. Moreover, it addresses some mistakes and contradictions that underlie this report. Whilst the report’s findings provide a solid insight into crowdfunding’s potential for the entire developing world, some key variables used are not applicable to China and therefore adulterate the findings. The author of this paper suggests an extended study, which considers country-specific variables and circumstances.

International Journal of Research in Business and Social Science (2147- 4478)

The purpose of this review is to shed light on the current state of crowdfunding and its possible effects on African communities. The goal of this article is to give a narrative overview of how crowdfunding has evolved, along with trends, challenges, and potential effects on African communities. Despite recent advancements in the usage of mobile technology on the continent, the growth of crowdfunding based on internet platforms has been quite gradual. According to research, the success of crowdsourcing initiatives in Africa depends on a hybrid strategy that involves the "offline" network of backers. The majority of research concluded that the biggest barriers to the growth of crowdfunding in Africa were a lack of knowledge and trust in public institutions, lax laws protecting the rights of backers and ensuring transparency, as well as technology (internet connection). Also mentioned was the possibility that significant cultural aspects of offline crowdfunding, if taken int...

2020

The chapter presents the current state of crowdfunding research and practice in Africa while outlining opportunities and challenges associated with them. Conditions of growing popularity of digital and mobile finance, low penetration of traditional financial institutions, and a long cultural heritage of communal mutual support may enhance crowdfunding uptake. On the other hand, conditions of unclear regulation, relatively low levels of internet access, and societies characterized by low social trust may all hinder crowdfunding uptake. Accordingly, African crowdfunding is at its infancy and involves transitory hybrid practices of early adoption, often involving reliance on foreign contributors via donations and pro-social lending platforms. To ensure future development, stakeholders should engage in relevant policy development, technological adaptations, raising public awareness, reducing user entry barriers, and creating incentives for trial.

Advances in E-Business Research

The recent urbanization process is increasingly rapid and unplanned. With the current projection that seven out of ten people worldwide will be living in the cities by the year 2050, with the majority of the growth occurring in cities of the developing countries, information technology (IT) can be used to positively drive the urbanization process. This chapter provides an integrative framework for which various IT trends can be harnessed to crowdfunding urbanization process by focusing on the use of mobile and other handheld devices. Existing use of mobile phone in developing countries focus on e-education, ecommerce, and social media technologies. However, there is little evidence that researchers have analyzed the role of IT in crowdfunding. Consequently, this chapter develops a framework on how the capabilities of mobile devices can be harnessed for crowdfunding urbanization process in the developing countries.

International Journal of Research in Finance and Management, 2023

Crowdfunding permits cultural, social, health, economic or for-profit initiatives that are marketed on the internet by individuals or groups of persons seeking financial assistance to raise funds from a broad pool of small-scale investors. In Ghana, the concept of crowdfunding is not particularly new. In recent times, various start-ups such as Kwidex, Crowdrica, and Payputt have been established as global crowdfunding platform through which people can donate to fund various projects. Like most social activities, various projects will have different success and this may be largely explained by the intentions of people to donate. However, there is no available data in Ghana to explain why crowdfunding projects fail or succeed. This study therefore sought to explore the determinants of crowdfunding Success in Ghana. The study relied on descriptive design within the quantitative framework to explain determinants of crowdfunding Success in Ghana. The study gathered 185 data from respondents that have contributed to crowdfunding campaigns. The data showed a higher shared identification with interpersonal connectivity, higher influence of recommendations, and moderate challenges as measured by the instrument. The paper recommends a less complex system of payment and also for facilitators and regulators to examine strategies to assist creators in developing realistic objectives for the projects.

Abstract: South Africa has one of the highest unemployment rates in the world. Small and Medium Enterprise (SME) support from government and traditional investors has failed to create suitable levels of employment for the country. A qualitative, inductive investigation into the potential online crowdfunding has for creating successful businesses and employment was conducted over the period of one month in a current South African context. Barriers to use, government’s role in crowdfunding, and the reason for Crowdfunding’s past failures in South Africa were investigated. Nineteen semi-structured interviews were conducted with actors in the crowdfunding world, of which twelve were with local Cape Town projects using online crowdfunding for the first time, via a local crowdfunding platform. Participants described various motivations on why they used crowdfunding, barriers to using it successfully, successful campaigns, and opinions on what role the government should have in crowdfunding. A majority of participants stated that the mentorship provided to them through the partnering crowdfunding platform was key to running a successful crowdfunding campaign. A majority stated government should have an active role in crowdfunding, via promoting and investing in it. Various motivations for using crowdfunding were given, with financial need and marketing being the top choices. Locally crowdfunded businesses and projects were found to increase local employment opportunities, and create new positions. Government partnership with local crowdfunding platforms, and match funding, seems to be a likely probability in the future after the success shown by these projects.

Sustainability

The aim of this article is to verify the hypothesis that crowdfunding campaigns with sustainable orientations are significantly more likely to convince investors and successfully raise funds. The research covered 50 successful crowdfunding projects’ reward and equity-based models, which were pledged on Polish platforms, and analyzed the context of the campaigns. Basic statistical non-parametric tests were used to analyze the data. The study shows that although there were big differences in the amount of raised funds and achieved success rates, the sustainable orientation of the project itself was not so important. It is worth noticing that the level of realization of the objectives of sustainable development was really low, and was not highlighted in the description. This paper explores the relevant success factors of crowdfunding projects, which is very important in order to prepare new ideas for financing and attract the crowd as an investor.

Asia Pacific Journal of Innovation and Entrepreneurship, 2018

Purpose The purpose of this paper is to develop initial evidence about the nature and features of crowdfunding in China, given it is largely unregulated regulatory frameworks. Design/methodology/approach The paper used extensive desk research using data collected from the public and private sectors, after which the data was analyzed parallel to existing academic literature, that is, institutional context by Bruton et al. (2014). This paper uncovered patterns of development, profiling crowdfunding platforms, examining the regulatory landscape and providing antecedents of successful crowdfunding projects in China. Findings When the traditional financial markets are hard to reach, micro, small and medium enterprises (MSMEs) were starved for capital. Crowdfunding can play a major role in funding and risk sharing. It is an innovative and dynamic vehicle for MSMEs as well as enthusiastic investors in China. Since its initial introduction to China in 2009, crowdfunding has gained substanti...