We are pleased to announce the latest addition to our Capacity Development Lab portfolio through which we will work with AFFORD will be implemented in four West African countries!
Providing almost 80% of jobs across Africa, small and medium enterprises (SMEs) are major drivers of economic growth. However, these businesses generally face a significant shortfall of accessible and affordable financing which hinders their capacity to grow and contribute further to meeting sustainable development goals. Similarly, diaspora remittances are also perceived as a strong engine for development in Africa, yet their potential to be used for productive investments is underutilised.
With this new action, we will support the African Foundation for Development (AFFORD) to enhance the capacity of actual and potential diaspora investors to fund local SMEs. This relates to AFFORD’s mission to mobilise the African diaspora’s financial and intellectual capital for socio-economic development.
The potential of diaspora crowdfunding and crowdlending
One of the obstacles identified by AFFORD to promoting and maximising diaspora investment is limited diaspora knowledge and access to effective funding schemes. As a response, AFFORD requested assistance from EUDiF to enhance diaspora investors’ capacities in online crowdfunding (investment in the form of contributions) and crowdlending (investment in the form of loans) for the benefit of SMEs in Benin, Ghana, Nigeria, and Senegal. This action is complementary to a larger ongoing project, ABC West Africa, run by AFFORD and the Swiss Agency for Development and Cooperation (SDC) which promotes job creation, economic resilience, and MSME growth.
Both digital mechanisms are becoming increasingly important funding options on the continent since they provide an alternative to traditional finance institutions which are usually inaccessible to SMEs. Online crowdfunding and lending also facilitate easier connection with investors abroad.
Aimed at developing the capacity of diaspora investors to crowdfund and crowdlend for African SMEs in target countries, this action will support AFFORD by developing a novel and tailored training curriculum and providing mentoring support plus technical guidance on communication strategies. This innovative approach to address the lack of capital of SME entrepreneurs will leverage both technological solutions and diaspora assets to produce concrete and sustainable results.
By the end of this collaboration, it is expected that AFFORD will be equipped with the know-how and tools to be able to train diaspora on crowdfunding, crowdlending, social media promotion, communication and campaigning. Concretely, 25 diaspora investors will participate in a pilot training, and 10 of them will receive mentoring and specialised assistance to actually develop and implement their own campaigns and platforms. This action is a pilot, which can be scaled and replicated by AFFORD in the region. In addition, the activities are also intended to enlarge both their networks, as well as to link participating African SME owners with diaspora and foreign investors.
For full details:
The CDL action with FORIM is just one of the ways we are strengthening the capacities of stakeholders to collaborate with the diaspora for sustainable development. You can find the info sheet on this action and all our other CDL actions here. You might also be interested in the actions under our parallel technical support mechanism, Diaspora Professionals 4 Development.