THE ” CROWDFUNDING ” SOON TO BE OPERATIONAL IN DJIBOUTI
The Ministry of Digital Economy and Innovation (MENI) and the Fonds Souverain de Djibouti (FSD) proceeded Monday, October 10, 2022, with the launch of the project “DJIBOUTI CROWDFUNDING.”
The Minister Delegate in charge of Digital Economy and Innovation (MENI), Mrs. Mariam Hamadou Ali, and the Chief Executive Officer of the Fonds Souverain de Djibouti (FSD), Dr. Slim Feriani, proceeded on Monday, October 10, 2022, to the launch of the project “DJIBOUTI CROWDFUNDING” at the Center for Leadership and Entrepreneurship (CLE).
An initiative to be rightly welcomed; EFFECTUS’s expertise leads the crowdfunding platform project; a company specializing in two main activities: consulting in strategy, innovation, and investment for international development institutions and companies (SMEs and startups) and implementing innovative financing solutions.
Crowdfunding is a technical tool of high finance that serves as a lever for states’ economic development. It also contributes to financing companies involved in new technologies or startups. It is a system of fundraising distinctive from traditional financial channels, operating on a digital platform and allowing investors to choose to finance identified projects directly.
After the 2008 financial crisis, Crowdfunding has become an alternative solution to the fundraising difficulties that project owners and startups encounter with traditional financial institutions.
Crowdfunding is booming in Europe, America, and Asia, where it has begun to prove itself to the point of being called a “financial revolution”: an explosion in the amounts raised ($113 billion in 2020 compared to $44 billion in 2015) and a substantial transformation of regulations and the behavior of savers, who are demonstrating their willingness to make a personal commitment to high-stakes projects (startups and SMEs, renewable energies, agriculture, culture, heritage, local authorities…)
The development of Crowdfunding remains modest in Africa despite strong growth observed since 2019 in some African countries.
The digitization of financing and savings mobilization channels through Crowdfunding will help formalize part of the formal economy; It will also help reduce the share of the informal economy in Djibouti’s GDP, and it will increase the financial inclusion of young entrepreneurs who would not have access to bank financing, which usually requires real collateral, long track records… (and thus support the government’s “Djibouti ICI” initiative)
MOBILIZE FUNDS FROM THE DJIBOUTIAN AND AFRICAN DIASPORA
Crowdfunding makes it possible to develop new sources of capital. This innovative mode of financing also makes it possible to channel remittances from the Diaspora into productive investments that create value and provide job opportunities for young people, reducing unemployment’s impact on the country. Crowdfunding will promote a form of financial inclusion of unbanked and unbankable young entrepreneurs by fellow Djiboutians and African brothers that the fate of life had led them to expatriate.
According to a 2021 Continental Migration Report, produced by the United Nations Economic Commission for Africa (ECA), in partnership with the African Union Commission: “international remittances have fared fairly well in the face of sharply deteriorating economic conditions in key host countries, containment measures and the closure of transfer services.”
Thanks to the digital revolution, Crowdfunding will absorb this flow of remittances and finance on the territory, promising projects via the Djiboutian and African Diaspora invited to invest in the economy of their native countries and continent.
PROMOTE THE DEVELOPMENT OF CROWDFUNDING
Once the opening ceremony of the project of setting up the platform “Crowdfunding” closed, all participants in this meeting were divided into various working groups to exchange and consult on technical topics under the headings: “Regulation, Ecosystem, and Strategic and Financial Partners of Crowdfunding in Djibouti.”
This work of reflection and consultation takes place from October 10 to 11. The participants will have to define, in fine, the regulatory framework and the specific legal regime of participatory financing in the Republic of Djibouti.
A discussion on creating an intermediary structure in charge of managing the Crowdfunding platform and establishing partnerships with the future actors of participative financing is also on the agenda.
Are, among others, invited to participate in these workshops, the regulatory bodies of the Djiboutian financial system, the national telecommunications operator, the association of the Djiboutian Diaspora, banks, incubators, entrepreneurs…etc.
In her speech, HE. Mariam Hamadou Ali recalled the government’s support of the private sector and entrepreneurship. She stressed that the emergence of many companies or startups versed in the field of new technologies and innovation is part of the government’s objectives to boost and boost the private sector, which largely relies on the country’s development. “More than a commitment, this policy of private sector support has been pursued, at full throttle, for over a decade to accelerate the growth rate. “Constant and permanent efforts are therefore being made,” she added. “Incentive efforts have been undertaken to improve the business environment and create a favorable ecosystem.”
“The Crowdfunding platform we are launching today will create an alternative instrument for better access to finance for entrepreneurs and will allow young idea holders to seed their projects if they meet a market need. We invite our Diaspora to invest and also to submit their project ideas. The platform will thus be an innovative tool to consolidate our links. The collaborative approach will allow us to quickly deploy the project and provide a Djiboutian financing offer compatible with the expectations of our ecosystem. I am sure that we will be able to create Djiboutian champions that will shine on a continental and global scale,” said Madam Minister Delegate in charge of the Digital Economy and Innovation (MENI).
In his speech, the Chief Executive Officer of the FSD, Dr. Slim FERIANI, said: ” I acquired Crowdfunding expertise in London, and then by introducing Crowdfunding (and the Crowdfunding law) in Tunisia, during my mandates (2017-2020) as a dual Minister of both Industry and SMEs as well as Energy, Mines, and Renewable Energies. I am delighted to contribute to the launch of Djibouti Crowdfunding, which answers the concerns of innovative companies in their quest for funding. In 2021, the FSD counted more than 300 project leaders and companies seeking funds during the call for applications for the entrepreneurship and innovation competition: “D-Startup.” The candidates were all Djiboutians and particularly from the Diaspora. This result shows the strength of the Digital; with the Internet and the development of social networks, all companies, whatever their stage of development, can find a contributor once their projects are online. The Crowdfunding platform, beyond its fundraising power, is, above all, an excellent marketing tool, allowing you to make your business idea known beyond the borders” and to add: “as a financial lever and to position the country as a regional and continental strategic pole for industry, trade, finance, logistics and digital, as stipulated in the national development plan: Djibouti Vision 2035, of His Excellency the President of the Republic, Mr. ISMAEL OMAR GUELLEH, the FSD in collaboration with the MENI is committed to supporting the private sector; to generate jobs and consequently contribute to the economic and social development and the inclusive and sustainable prosperity of the country”.
The Djibouti Crowdfunding platform will be operational by April 2023