Capacity development of diaspora to leverage funds for African SMEs
Small and medium enterprises (SME) are the main source of employment in most African economies, accounting for more than 80% of jobs. Despite this, businesses in developing countries generally face a significant shortfall in financing. Since its inception in 1997, the African Foundation for Development (AFFORD) has focused on job creation on the continent and recognises the role of SMEs in driving solutions. AFFORD also sees great potential in the diaspora appetite to invest in Africa for both philanthropic and investment purposes.
From 2018 to 2019, AFFORD partnered with Global Giving UK to deliver a Diaspora Accelerator Crowd-funding Campaign as part of its Diaspora Finance Initiative, which explores structural enablers and obstacles to maximising diaspora investment for economic growth. Based on this, AFFORD requested assistance from EUDiF to develop diaspora capacity in online crowd-funding (contributions) and crowd-lending (loans) – collectively “crowd-investing” – for the benefit of African SMEs.
The action leverages AFFORD’s expertise in crowd-lending and complements it with additional expertise on crowd-funding. It targets potential diaspora investors in Europe with an interest in one of more of four African countries: Benin, Ghana, Nigeria, and Senegal, countries which have recognised the important role of their diaspora and seek to enhance their engagement.
campaigns.
Programme of activities
This action supported AFFORD's work with diaspora investors. The activities were essential to build a strong foundation for the sustainability of the programme. Activities included careful formation of the methodology as this dictated the outreach strategy, research approach, target audiences and development of the overall action delivery. A great deal of attention was paid to monitoring and evaluation as the outcomes of this action will inform further iterations of the programme.
A diaspora research expert and marketing expert conducted research to compare existing investment mechanisms; identify target beneficiaries and their communication channels; and establish selection criteria.
The research expert identified the particularities of crowd-funding and crowd-lending in each target country. The information gathered fed into the development of the curriculum and training tools for the diaspora investors.
As crowd-lending expert, AFFORD worked with a crowd-funding expert to develop the training content and tools on crowd-investing, and become a training team.
The training team trained experienced diaspora investors on crowd-investing techniques. This led to a pool of skilled trainers able to cascade the knowledge to diaspora investor communities.
The training team with EUDiF, visited two of the target countries, Benin and Ghana, to train potential recipients of crowd investment campaigns. The training enabled them to understand how different mechanisms work and what role they play in attaining successful campaign outcomes.
The training team trained 25 diaspora investors connected to diaspora communities in their respective countries in Europe. The training took place online.
To put the training into practice, 10 of the trained investors received mentoring support in order to carry out a crowd-funding or crowd-lending campaign linked to entrepreneurs in one of the target countries.
The research expert monitored the outcome and responses to the content, tools and training. On completion of the training components, the expert evaluated the programme and provided recommendations for further development.
With support from EUDiF, AFFORD evaluated the overall action and identified recommendations and guidance points from the lessons learnt.
The relevant experts adjusted the tools according to the feedback and comments received throughout the action. All partners received the finalised documents and participated in the validation meeting.
