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Mobile Crowdfunding – The Next Frontier for Fundraising

02 August, 2014

Source: ICT Africa

Kihara Kimachia:

There is nothing new under the sun. The recent fundraising strategy of appealing directly to the masses to fund a business idea, cause or to address some personal challenge using crowdfunding websites is nothing new. Seeking material assistance from the community when the going gets tough is as old as time; philanthropy is also ancient. Almost all religious and cultural entities have philanthropic expectations of their members.

It is therefore not surprising that web technology companies like Kickstarter and Indiegogo are runaway successes. In Africa, online crowdfunding sites like Nigeria’s 234give and StartCrunch, South Africa’s ThundaFund, StartMe and FundFind, and Ghana’s SliceBiz are attempting to replicate the success of European and American fundraising sites.

Technology has greatly reduced the costs of fundraising and automated many manual processes. In the pre-Internet days, running a fundraiser to raise even a modest amount of money was an intense logistical and financial undertaking. To state that the arrangements were elaborate is an understatement. The process involved; planning meetings, inviting contributors usually via a printed invitation card, booking the venue or getting a venue ready, identifying an MC, arranging for food and refreshments and much more.

With the Internet, this has all changed. All one needs to do is create a campaign on a crowdfunding website, involve friends and family via e-mail and social media, and voila, just like that you begin receiving donations. The site takes a small percentage, less than 5% mostly, and the funds are remitted to your bank account at the end of the campaign.

However, one of the most obvious challenges with online crowdfunding in Africa is that there aren't enough users of the technology yet. Conventional ICT wisdom dictates that technology is only as good as the number of people using it. Despite the prevalence of fundraising as a source of social insurance in Africa, we are yet to see widespread use of online crowdfunding sites in villages across Africa. Internet penetration is still quite low notwithstanding significant progress towards improving connectivity over the last decade. For example, South Africa has a population of 51 million but only 8.5 million people are online. Nigeria, with the largest population in Africa at 169 million people, has slightly less than 50 million online; and in Kenya; only 12 million people are online despite a population of 43 million. The critical mass of social media users needed to ensure online crowdfunding takes off is also lacking. In South Africa, Kenya and Nigeria there are only 6.3 million, 3.6 million and 6.7 million Facebook users respectively. This greatly limits the market reach of crowdfunding sites.

But, since much of Africa has leapfrogged directly to mobile applications bypassing web applications, there is chance that mobile crowdfunding may experience the same widespread success that other mobile applications such as mobile money have enjoyed. Blazing this trail is Kenyan mobile crowdfunding startup M-Changa which was recently selected as a finalist for Startupbootcamp, one of Europe's leading tech business incubators. The company has assisted over 2,500 people raise more than $120,000 over the past year and a half to fund businesses, causes and personal problems such settling medical bills.


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