Crowdfunding was heralded as a potential source of billions of dollars of financing for developing countries by experts and policy-makers at a global conference in Ethiopia this week.
Jamaica’s Minister of Finance, Dr Peter Phillips, told a side-event at the United Nations Financing for Development conference in Addis Ababa that crowdfunding – where ordinary citizens invest small amounts of money in businesses, social projects or charitable causes – could be a “genuinely exciting” way of “democratising finance”.
“We would like very much to look at the possibilities of what could occur using crowdfunding,” Dr Phillips, the co-chair of the panel discussion, said.
“Access to affordable financing is of central importance, especially if we are to satisfy the development goals which are the heart of this conference. There is the prospect of crowdfunding being a viable solution for helping Jamaica, and other countries, channel financing to small and medium enterprises to grow private sector investment,” the Minister said.
The panel was co-chaired by Commonwealth Deputy Secretary-General Deodat Maharaj, who began by setting out the huge potential of crowdfunding to help plug a gap in funding international development goals, which cannot alone be met by established revenue streams.
“For 2014, the total amount of financing raised through crowdfunding amounted to $16 billion. This year it is projected to reach $34 billion. By 2020, the World Bank estimates that developing countries alone will raise $90 billion,” Mr Maharaj said.
“We in the Commonwealth support a focus on domestic resource mobilisation, such as taxation, but we believe that there is also an urgent need to look at innovative sources of financing including crowdfunding to meet the huge financing gap as we seek to deliver the Sustainable Development Goals,” the Deputy Secretary-General continued.
Experts who spoke at the side-event on 15 July 2015 included Jason Best, Co-founder and Principal at Crowdfund Capital Advisors, Oliver Gadja, Founding Chairman and Executive Director of the European Crowdfunding Network, and Samantha Attridge, Head of Finance and Development Policy at the Commonwealth Secretariat.
The panel was joined by Peter Baeck, Principal Researcher for Public and Social Innovation at Nesta, who explained that, while crowdfunding is reliant on investors having internet access, the rapid take-up of smart mobiles in developing economies is opening up crowdfunding opportunities.
“What drives crowdfunding is the proliferation of social media, the internet and new technologies which are incredibly low-cost and mean you can reach out to large groups of people,” Mr Baeck said.
Speakers noted the importance of governments putting in place measures which support the development of crowdfunding, but which also regulate the burgeoning industry to safeguard investors.
Mr Maharaj stressed that the Commonwealth Secretariat is committed to taking the financing for development agenda forward. For example, a forum at Marlborough House in London on 20-21 July 2015 will look at reducing the risks associated with diaspora money transfers, which provide a crucial source of income to citizens in many developing countries. Find out more
Notes to Editors:
Photos from the side-event are available on request. Please email [email protected].
Join the conversation online: @CommonwealthSec #Crowdfunding #FinancingforDevelopment #FFD3 #Commonwealth