The Nigerian Securities and Exchange Commission has revealed plans to regulate crowdfunding in a bid to curb risks for investors and financiers looking to support small businesses and startups.
The acting SEC Director-General Mary Uduk said, “Crowdfunding helps deepen the market by providing an alternative investment opportunity.” The new regulations are also aimed at stamping out “fraudsters” and will be released later this year.
Small businesses and startups find it hard accessing funds from banks due to high-interest rates as much as 31%. It has also been seen that sourcing from other avenues like a stock-market listing or debt issuance comes with too many costs and regulatory requirements.
Also, a lot of investors do not engage existing crowdfunding websites, such as Naijafund and Fundanenterprise owing to a lack of regulation. Farmcrowdy, which provides agricultural inputs and training, has supported 25,000 farmers since its inception in 2016, according to its website.
The head of registration and market infrastructure department at the SEC Emomotomi Agama said that the operator will need to meet the requirements to be able to continue.
