Fintech firm gets first crowdfunding licence

22 May, 2022 - 00:05 0 Views
Fintech firm gets first crowdfunding licence

The Sunday Mail

Enacy Mapakame

Fintech firm Lloyd Crowdfunding has become the first company in Zimbabwe licensed to provide crowdfunding services and offer various financial instruments for companies to raise capital.

Crowdfunding for businesses is the online offering of a private company’s financial securities, for instance, equity and debt instruments to a group of people for investment, leveraging on the easy accessibility of vast networks of people through social media and crowdfunding websites to bring investors and entrepreneurs together.

Parent company, Lloyd Corporate Capital, has for over 15 years been providing human, equity and debt capital as well as training and advisory services to medium-sized businesses in Southern Africa, with sister company Lloyd Markets offering a stock investment platform that enables the public to invest in listed counters on the Zimbabwe Stock Exchange (ZSE) and the Financial Securities Exchange (FINSEC) through a mobile application, Lloyd Markets.

Lloyd Crowdfunding chief technology officer Mr Gift Gana said the latest service was a welcome development that would enable the fintech firm to bridge the funding gap by assisting budding entrepreneurs, especially women and youths, to raise capital for their expansion projects.

“The main aim of Lloyd Crowdfunding is to assist SMEs raise funding for their capital and operational requirements.

The Lloyd Crowdfunding platform brings together SMEs and investors to enable SMEs to raise capital through equity, quasi-equity, loans, or a combination of both loans and equity.

“The approval we have received from RBZ allows us to assist the many SMEs, including women and the youth, that are failing to get the much-needed funding, because they do not have collateral to obtain financing from traditional channels,” he said responding to questions from this publication.

In the past, the crowdfunding system has generally been used for charity and personal fundraising efforts. But small to medium enterprises (SMEs) in several African countries like Mauritius, South Africa, Morocco, Tunisia, Ivory Coast and Senegal have however, successfully managed to raise capital for business start-ups and growth through crowdfunding.

Zimbabwe currently has no form of legislation on crowdfunding, hence the introduction of a regulatory framework known as the Regulatory Sandbox monitored by the central bank.

The Fintech Regulatory Sandbox is intended for innovators in the financial services sector who have already developed their service, product, or business model and are ready to undertake a proof of concept through monitored market testing.

The operating requirements under the Sandbox and adoption of industry best practices from the African Crowdfunding Association (ACfA) guides the firm to ensure that investors are exposed to well-vetted investment opportunities and the platform is protected from fraudsters. Mr Gana added the Lloyd Crowdfunding’s lower limit for an investor to invest was US$1 000 and a maximum of US$500 000 or the Zimbabwe dollar equivalent.

He said: “Crowdfunding is a fast-growing industry globally and within Africa, and we are excited to be pioneering it in Zimbabwe under the RBZ Fintech Regulatory Sandbox. We are thus inviting registered SMEs with bankable projects to approach us for a listing on our platform.

“We foresee better prospects for SMEs in the next five years and beyond arising from the greater opportunities to access the much-needed capital that our crowdfunding platform will enable.”

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