The state of crowdfunding in Africa and its potential impact: a literature review

Abstract

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 into consideration, would make it easier for African business owners to adopt the practice. It has lagged behind other continents in the use of crowdfunding to raise money for small businesses or individuals, which could also help with financial inclusion in Africa, either directly for individuals or by sponsoring small enterprises. It is necessary to have a regulatory framework that promotes technological advancement while also reducing crime and fraud. Additionally, establishing platforms based on continents and creating synergies with existing financial actors would raise awareness, boost confidence, and whet interest in using them.