Crowdfunding in Tunisia, what is the current status, challenges and benefits?
Crowdfunding, which is going through a boom in developed countries, is still in its early stages in Tunisia, even though it is a platform that seems adapted to respond to the challenges of human, social and economic development.
Several international development institutions, such as the World Bank, were among the first to promote crowdfunding as a new means of financing that encourages development and financial inclusion. In Tunisia, Mercy Corps and the French Development Agency have provided financial support for the following crowdfunding initiatives: CoFundy and Afrikwity.
The current situation and potential for development
Several crowdfunding platforms have been founded in Tunisia, but the projects never really got off the ground due to regulatory restrictions.
According to studies conducted by the crowdfunding platform CoFundy (for the year 2014), and by the European program Switchmed (for the year 2015), Tunisian projects have been raising funds using foreign platforms, despite the absence of a legal framework in Tunisia. In June 2014, 109 projects requested a total of €1.9 million in funding. Just 9 of those projects were successful, receiving a total of €90,000. In April 2015, 32 projects succeeded in raising around €200,000 in total, an increase in over 120% on the amount raised before. This funding was mainly raised through donations (due to the difficulties associated with the other two types of funding) through foreign platforms based in France, the US and Lebanon.
The main platforms that operate in Tunisia are KissKissBankBank (donations, based in France), zoomaal (donations, based in Lebanon), CoFundy (donations, based in Tunisia and France) and Afrikwity (investments, based in Tunisia and France).
CoFundy and Afrikwity (founded by Tunisians) were forced to set up their businesses in France in order to benefit from the country's regulatory framework for crowdfunding, allowing them to raise funds for projects in Tunisia (and further afield in Africa) especially through the Tunisian diaspora. Without a regulatory framework Tunisia, these platforms can not directly use funds from Tunisian citizens.
Analysing the figures, these initiatives and the context of crowdfunding in Tunisia shows the following. There is a strong demand for crowdfunding in Tunisia which has not yet been satisfied (less than 5% of funding needs were met in 2014). This is why Tunisia needs to develop its own crowdfunding platforms, which will ensure project leaders are able to connect with the people able to finance them.
Furthermore, synergies between traditional funding providers (banks, financial institutions) and crowdfunding platforms are currently under development: several potential partnership schemes would better respond to the need for financing projects and would offer new innovative opportunities for citizens to invest their savings.
Crowdfunding's current rate of growth and the new crowdfunding platforms being developed means the potential of crowdfunding in Tunisia is estimated to be worth €10 million by 2020. This potential could double if Tunisia adopts a regulatory framework conducive to developing crowdfunding.
The advantages for Tunisia
In the current context of Tunisia, crowdfunding could bring concrete solutions to the challenges of development.
Crowdfunding would provide new sources of funding tailored to the needs of SMEs and startups  such as: financing working capital through crowdfunding platforms via loans, which would be an effective solution due to their accessibility, their speed of implementation and pooling the risk. Moreover, capital funding via equity crowdfunding provides capital financing solutions that are tailored to Tunisian startups and innovative projects. It is also a powerful promotional tool for projects that could extend beyond Tunisia.
Crowdfunding can be an opportunity to provide local authorities with new tools to finance local projects. Within the context of decentralisation, local authorities will be faced with the need to find additional funding for local development projects, as well as the challenge for getting approval for these projects from citizens.
Some of the additional benefits that Tunisia would gain from this new means of funding are: encouraging new and exciting ideas for society by funding community projects with an impact on citizens and society, promoting cultural and creative projects, and allowing the Tunisian diaspora to contribute more to development in Tunisia.
Several programmes funded by international development institutions provided support for certain sectors of the economy and the civil society initiatives in Tunisia following the revolution. This support usually has a time limit, and Tunisia must innovate and find new ways to finance its economy. Crowdfunding might offer a solution (or support) while preparing for alternatives from international donors.
Tunisia could benefit from crowdfunding beyond the impact on local and national development. Crowdfunding offers Tunisia the opportunity to be a pioneer and leader in this new industry throughout Africa.
By creating the right conditions for crowdfunding to develop, Tunisia has the potential to become the leading African country for crowdfunding, and could become an African "hub" for FinTech companies.
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