Crowdfunding in East Africa: Regulation and Policy for Market Development

76 Pages Posted: 30 Jun 2020

See all articles by Kieran Garvey

Kieran Garvey

University of Cambridge - Cambridge Centre for Alternative Finance

Tania Ziegler

University of Cambridge - Cambridge Centre for Alternative Finance

Bryan Zheng Zhang

Cambridge Centre for Alternative Finance, Cambridge Judge Business School, University of Cambridge

Robert Wardrop

University of Cambridge - Cambridge Centre for Alternative Finance

P. Raghavendra Rau

University of Cambridge

Mia Gray

University of Cambridge - Cambridge Centre for Alternative Finance

Samantha Ridler

University of Cambridge - Cambridge Centre for Alternative Finance

Date Written: May 10, 2017

Abstract

Earlier in 2016, DFID-funded FSD Africa partnered with the Cambridge Centre for Alternative Finance (CCAF) and Anjarwalla & Khanna to conduct a regulatory review of different crowdfunding models across Kenya, Tanzania, Uganda and Rwanda.

Crowdfunding is fast taking shape across East Africa - particularly non-financial return based models such as rewards and donations crowdfunding. However, return-based equity and loan-based crowdfunding are really only starting to emerge. Such FinTech models require careful and considerate attention from financial regulators in East Africa to catalyse and harness their potential positive economic and social benefits whilst addressing systemic and consumer risks and challenges.

This report highlights some key priority regulatory and policy areas necessary for market development in Kenya, Uganda, Rwanda and Tanzania while drawing on insights & experience from the UK, the USA, Malaysia, New Zealand and India.

New crowdfunding regulations in East Africa are not recommended at this time. Instead, other regulator-led, market development initiatives should be considered including:

A living database of all, existing, regulator-acknowledged platforms in East Africa.

Regulator engagement opportunities - to bring together the East African crowdfunding industry, practitioners, experts, potential funders and fundraisers.

Develop a regional regulatory laboratory or 'Sandbox' to guide crowdfunding businesses through the relevant regulatory processes and requirements.

Regulators should encourage the East African crowdfunding platforms to build a regionally-focused industry association to undertake self-regulation and institute guidelines and principles to foster innovation while protecting investors.

The report goes into a great deal of depth covering markets in East Africa and other more established crowdfunding markets. It also provides useful guidance for crowdfunding platforms that are seeking to establish operations in these countries as well as hopefully encouraging platforms operating elsewhere to consider East Africa as a market to provide their innovative financial crowdfunding services.

We would like to thank the large number of contributors who have made this research possible including a wide array of regulators from the Capital Market Authorities, Central Banks and Communication Authorities of Kenya, Rwanda, Uganda and Tanzania as well as the host of experts, crowdfunding platforms and other policymakers that have generously provided their expertise and insight.

Keywords: FinTech, alternative finance, crowdfunding, P2P lending, microfinance, payments, regulation, policy, innovation, africa, Kenya, Uganda, Rwanda, Tanzania, India, UK, New Zealand, Malaysia, USA

JEL Classification: G23, G28, G38, F65, F63, G18, O19, O33, O38, O55, Q01, Q28, Q42

Suggested Citation

Garvey, Kieran and Ziegler, Tania and Zhang, Bryan Zheng and Wardrop, Robert and Rau, P. Raghavendra and Gray, Mia and Ridler, Samantha, Crowdfunding in East Africa: Regulation and Policy for Market Development (May 10, 2017). Available at SSRN: https://ssrn.com/abstract=3621303 or http://dx.doi.org/10.2139/ssrn.3621303

Kieran Garvey (Contact Author)

University of Cambridge - Cambridge Centre for Alternative Finance ( email )

10 Trumpington Street
Cambridge, CB21QA
United Kingdom

Tania Ziegler

University of Cambridge - Cambridge Centre for Alternative Finance ( email )

10 Trumpington Street
Cambridge, CB21QA
United Kingdom

Bryan Zheng Zhang

Cambridge Centre for Alternative Finance, Cambridge Judge Business School, University of Cambridge ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom

HOME PAGE: http://www.jbs.cam.ac.uk/ccaf

Robert Wardrop

University of Cambridge - Cambridge Centre for Alternative Finance ( email )

10 Trumpington Street
Cambridge, CB21QA
United Kingdom

P. Raghavendra Rau

University of Cambridge ( email )

Cambridge Judge Business School
Trumpington Street
Cambridge, Cambridgeshire CB21AG
United Kingdom
3103626793 (Phone)

HOME PAGE: http://www.raghurau.com/

Mia Gray

University of Cambridge - Cambridge Centre for Alternative Finance

10 Trumpington Street
Cambridge, CB21QA
United Kingdom

Samantha Ridler

University of Cambridge - Cambridge Centre for Alternative Finance ( email )

10 Trumpington Street
Cambridge, CB21QA
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
38
Abstract Views
207
PlumX Metrics