Author(s): Tomomewo Amos Olafusi, Akintoye Rufus Ishola, Busari Tajudeen Abimbola, Omopintemi Jerome Idowu
The study examines the role crowd funding plays in the development of SMEs in Africa. The challenges confronted by SMEs in funding business is very obvious globally but more pronounced in Africa as traditional funding sources such as banks give preference to well established firms to the detriments of these SMEs. This challenge, combined with low level of technology, education and preference for foreign platforms account why SMEs in the continent cannot compete favorably. The advent of crowd funding addresses these gaps by decentralizing the sources of finance to fundraisers. The study which used exploratory research design discovered that the use of crowd funding as an alternative method of raising fund by SMEs in Africa is still at its nascent stage as it only represents less than 0.1% of the total worldwide crowd funding market with only 25 active platforms. The study finds out that SMEs serves as a backbone of economies and it is crowd funding maximally, the need for series of physical meetings and interactions between parties before funds is advanced will be reduced and the barriers place on funding by geographical location of SMEs will be eradicated. Furthermore, the practice of depending solely on a particular investor by SMEs will be forgotten. The study was concluded by recommending stakeholders’ sensitization, increase awareness on the use of technology through education of SME owners. These, in addition to friendly but firm regulatory framework will go a long way to project crowd funding as an alternative method of funding and contribute positively to the development of SMEs in Africa and will also encourage preference for Africa crowd funding platforms