Mounir Gwarzo, The director general of Nigeria’s Securities Exchange Commission (SEC), said earlier this week that crowdfunding for businesses and startup is not possible in Nigeria for now because Nigerian Companies and Allied Matters Act (1990) and Investment and Securities Act (2007), which regulate the formation and operation of companies as well as the sale of securities to the public, make no provisions for crowdfunding for businesses
Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture using easy accessibility of vast networks of people through social media and crowdfunding websites to bring investors and entrepreneurs together.
That announcement is a big blow to businesses, especially startups in Nigeria who local banks are reluctant to lend money to for business because of high risk
According to Gwarzo “We are aware of the growing interests among Nigerians to use Crowdfunding to raise funds. However, that cannot materialise now given the legal challenges as a result of the provisions in CAMA and ISA. But we are looking for ways to go about it so that companies will enjoy the benefits of Crowdfunding in the country as well,”
For many busineses and startups in Africa’s largest economy, that cannot happen quickly enough.so for now founders must dig into their own pockets to get their business running