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.
Programme of activities
This action is the beginning of AFFORD's work with diaspora investors, therefore the activities are essential to build a strong foundation for the sustainability of the programme. Activities include careful formation of the methodology as this will dictate the outreach strategy, research approach, target audiences and development of the overall action delivery. A great deal of attention is also being paid to monitoring and evaluation as this will inform further iterations of the programme.
A diaspora research expert and marketing expert conduct research to compare existing investment mechanisms; identify target beneficiaries and their communication channels; and establish selection criteria.
The research expert will identify the particularities of crowd-funding and crowd-lending in each target country. The information will feed into the development of the curriculum and training tools for the diaspora investors.
As crowd-lending expert, AFFORD works with a crowd-funding expert to develop the training content and tools on crowd-investing, and become a training team.
The training team will train experienced diaspora investors on crowd-investing techniques. This will lead to a pool of skilled trainers able to cascade the knowledge to diaspora investor communities.
The training team will train 25 diaspora investors connected to diaspora communities in their respective countries in Europe. The training will take place online.
The training team will visit two of the target countries, Benin and Ghana, to train potential recipients of crowd investment campaigns. The training will enable them to understand how different mechanisms work and what role they play in attaining successful campaign outcomes.
To put the training into practice, 10 of the investors trained will receive 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 will monitor the outcome and responses to the content, tools and training. On completion of the training components, the expert will evaluate the programme and provide recommendations for further development.
With support from EUDiF, AFFORD will evaluate the overall action and identify recommendations and lessons learnt.
The relevant experts will adjust the tools according to the feedback and comments received throughout the action. All partners shall receive the finalised documents and participate in a validation meeting.