Ghana has thoroughly embraced its diaspora; it is guided by the recognition that “Diaspora support [is] not only for remittances but also for the exchange of knowledge, skills and long term investments for sustainable developments,” as stated by Ghana’s president, Nana Akuffo Addo. The 6th of March 2024 marks the 67th Ghana National Day, a perfect moment to reflect on our action with AFFORD which exemplifies this aim by boosting diaspora support to entrepreneurs in Ghana…
In 2022-23, we worked with AFFORD on an action all about crowdfunding and crowdlending for countries in West Africa, specifically Ghana and Benin. During the collaboration, AFFORD, a diaspora organisation based in the UK, Belgium, Nigeria and Ghana, developed an innovative Crowdfunding Curriculum and trained 95 diaspora investors on how to use crowdfunding platforms, and how to support entrepreneurs based on the continent to raise funds, strengthen their structures and enhance their business story. Mirroring the training for diaspora investors, 39 entrepreneurs in Benin and Ghana were trained on the different platforms and what is necessary for them to have in place to effectively raise funds.
Whilst in Ghana, EUDiF’s Elvina Quaison spoke to AFFORD, its local partners and some of the entrepreneurs who participated in the training about the benefits of crowdfunding for their business. Elvina also met with interested stakeholders, including the EU Delegation and GIZ, to share the work being done to support diaspora investment.
AFFORD’s Director, Stella Opoku Owusu, explained crowdfunding is important for SMEs in Ghana and beyond because “Crowdfunding can be a tool to get businesses off the ground. As an organisation that has supported many SMEs to formalise, crowdfunding is excellent in providing an introduction to all the business formalities (due diligence) that investors or funders need, to make a trusted commitment.”
For AFFORD’s locally-based partner MDF West Africa, who support SMEs with business development and access to market, a financing mechanism like crowdfunding has great potential to support their entrepreneurs as attracting growth finance is difficult and expensive in Ghana, where currently rates for a commercial loan are over 30%. After joining the training, MDF intends to use its new knowledge to train its entrepreneurs.
The entrepreneurs themselves were interested in the training for the potential to access financing for the businesses in a new way. The highlight for one entrepreneur was “to get to understand crowdfunding and the different forms it can take and uses for my business, before this I thought it was only for asking for help for health or education.” Whilst others particularly appreciated the global perspective that the diaspora and experts shared, including insight into why it was important that they formalise and improve their businesses to be universally investor-ready to increase their opportunity for growth. As one entrepreneur remarked, “Previously we did our accounts to suit ourselves, after the training we brought in external accountants to make sure all paperwork is in line for investment”.
On the other side of the investment, the benefits of crowdfunding for diaspora investors are a key motivator, as Stella explains, “For diaspora investors, crowdfunding offers an opportunity to test out an investment or even a business relationship with smaller and affordable investment funds on a secure platform. For the many diaspora investors who want to be ‘closer to their investment’, crowdfunding in its very nature can offer the opportunity to develop a closer ‘relationship’ with the entrepreneur and business they wish to support.”
The dual training programme has leveraged the roles diaspora can play in SME business development with innovative financing and knowledge transfer. Enhancing the understanding of both investor and entrepreneur of crowdfunding mechanisms, as well as their respective requirements for collaboration has boosted the confidence of both in using crowdfunding to achieve their respective goals.
Taking a step back on Ghana National Day to see the action in the context of Ghana as a leading light in diaspora engagement, Elvina wrapped up the action: “This action has come at a timely moment as Ghana has recently launched its diaspora engagement policy. The strategy recognises the range of valuable contributions the diaspora can and do make. Being here in Accra, speaking to our stakeholders, it is so rewarding to see the impact our action with AFFORD and partners has already made. It highlights the diaspora value in sharing their skills, their perspective from being connected locally and globally as well as their eagerness to invest financially in the right endeavour in the right way! I really look forward to seeing all stakeholders next steps.”