Crowdfunding / crowdinvesting / crowdlending
FinTechs belonging to this category operate crowdfunding, crowdinvesting and crowdlending platforms on which money is raised to invest in various projects, mainly start-up companies and real estate projects.
Crowdfunding is not a defined financial service, but generally used to describe donation-based crowdfunding (the investor donates the money to the project), reward-based crowdfunding (the investor receives an often symbolic consideration for his investment), equity-based crowdfunding (crowdinvesting: the investor participates in the profits of the financed project or acquires shares or debt instruments) or lending-based crowdfunding (crowdlending: the investor is reimbursed at the end of the project with or without interest).
Attitude of the country towards crowdfunding, crowdinvesting and crowdlending platforms
Currently, crowdfunding is getting more popular in Tanzania. There is a boom in crowdfunding by FinTechs and Start-up innovators. The government is also taking initiative to allow for the growth and development of these platforms by setting up relevant policies and encouraging investing and Start-up projects.
Obligations and requirements to provide crowdfunding, crowdinvesting and crowdlending platforms described above
Capital Market and Securities Authority (“CMSA”) is the regulator of crowd fundings, although there is no specific law or regulation guiding the same currently. However, there is a policy underway which will, among other things, obligate the platforms to be listed in the Dar Es Salaam Stock Exchange (“DSE”) and raise money through crowdfunding for investment purposes.
Additional comments regarding the legal situation for crowdfunding, crowdinvesting and crowdlending platforms or what FinTech’s must be aware of in this business area
A strong and clear regulatory framework is required in this industry to protect people from losing their money or from falling for ponzi schemes.
Market size for crowdfunding, crowdinvesting and crowdlending platforms and biggest companies in this business area
The current market for crowdfunding platforms in Tanzania is quite high as there are only a few well-known platforms that are operating in Tanzania. Existing platforms such as WEZESHAsasa, Wengi equity crowdfunding and Mbadala equity crowdfunding already carry out crowdfunding projects that link Start-ups with the relevant investors, as well as linking Start-ups with the general public. However, there is always room for more crowdfunding platforms to arise in Tanzania.
Additional comments regarding the economic situation for crowdfunding, crowdinvesting and crowdlending platforms or what FinTech’s must be aware of in this business area
The development of regulatory frameworks and policies in this area will allow for the growth of innovators as well as allow for the growth of large investors who will be willing to take part in investment projects in Tanzania.