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Opinions of Wednesday, 7 January 2015

Columnist: Adufutse, William Yaw

Developing the Entrepreneurial Spirit in Ghana Part VI: Crowdfunding

By
William Yaw Adufutse, Ph.D.
One of the variables of the success of a project, an idea, innovation, or any type of business venture is through funding. In some of my previous articles, I discussed the sources available for funding projects such as the traditional banking institutions, venture capitalist, individual savings account, family and friends. One other source which has grown exponentially is Crowdfunding.
Crowdfunding is raising money from a large number of unknown individuals for any idea that can be thought of. The funding is done primarily through the internet. In the U.S alone, crowdfunding is about $3billion industry that can be tapped into for any meaningful idea. There are several types of crowdfunding, of which equity financing is one of them. Investors are given some equity percentage of the project in proportion to the contributions the investors made to the fund.
This mechanism has the U.S legislative backing and is a viable legal financing avenue for both small and large organizations. Whether the individual is a start-up entrepreneur or not the funding mechanism is available. It has to be made clear that crowdfunding is not a U. S. funding institution. The organizers of the sources have to follow strict business rules that are put in place by congress.
I am not sure if the practice of pulling funds together by business women in Ghana is still an ongoing practice. When I was growing up in Ghana, my mother was a business lady, so about 10 or more business ladies would get together and contribute a set amount, say hundred Ghana cedis each week. At the end of the week, the total amount contributed would be given to a participant according to the rotation number. In that way, there was an instant boost of capital to work with. Crowdfunding is similar to that except that it is much more efficient and has all types of legal force behind it.
The problem I see in applying this approach to individual business persons, prospective business persons, and corporations is truthfulness, reliability, dependability, and an environment lacking corruption in Ghana. Additionally, there ought to be legislative backing with laws that protect investor into the pool along with a tracking mechanism for each contributor to the fund. The same applies to the borrower too. These are not a problem in the U.S for example because there are all kinds of individual tracking methods. In some cases even if a borrower runs to another country, that person can be traced and prosecuted.
There is a lot of money in Ghana that can help in establishing crowdfunding but what I mentioned are some of the hindrances. You can find a lot of crowdfunding organizations on the Web. If you or your organization wants help to establish one, I can consult for you and provide you the necessary processes to follow.

Dr. William Yaw Adufutse is from Anfoega in the Volta Region, and a Professor of Leadership and Organizational Change in the US. His book Leadership theories: The relevance of transformational leadership is scheduled to be released in March, 2015. He can be reached at adufu1wy@yahoo.com