Technology Innovation and Entrepreneurship Center (TIEC), United Nations Development Programme in Egypt (UNDP Egypt) and the UNDP Alternative Finance Lab (AltFinLab) partnered together to foster crowdfunding in Egypt during the week of 3rd to the 7th February 2019. In 2017, $65 billion was raised on global crowdfunding platforms and there is an upward trend in developing countries in adopting crowdfunding as a source of finance. This is particularly interesting for Egyptian SMEs, as only 50% of SMEs in the formal sector currently engage with banks. Crowdfunding lowers barriers of access to finance and matches demand and supply of finance as it allows individuals to make contributions and investments directly to projects they are passionate about. Egypt does not make sufficient use of such funding and this weeklong program was set to introduce more widely and foster this way of funding.
Randa Aboul-Hosn, UNDP Resident Representative a.i. in Egypt outlined the importance of crowdfunding for Egypt development, explaining: “Budding energetic young SMEs of Egypt present almost unlimited potential for economic growth and for creative solutions to social and environmental challenges, but they have limited access to capital. Crowdfunding is one important innovative way to bridge this gap. TIEC, UNDP Egypt and UNDP AltFinLab partnered for Egypt to stimulate the crowdfunding ecosystem”.
Crowdfunding is a very impactful tool for accessing finance that is not fully utilized in Egypt yet. Through the crowd funding academy, we hope to raise awareness about it and also develop skills in supporting entities to help startups build crowdfunding campaigns.
– Rasha Tantawi, Head of Entrepreneurship and Business Support at TIEC
The week kicked off with a national roundtable, hosted by the American Chamber of Commerce, on the challenges and opportunities of crowdfunding in Egypt. The roundtable brought together high-level representatives from the banking sector, entrepreneurs, investors and enterprise support organizations. Issues raised included different regulatory and policy challenges facing the entrepreneurial ecosystem when planning and executing crowdfunding campaigns to be able to collect and allocate funds safely, the need to create an enabling environment for innovative models to emerge, and an emphasis on financial literacy/awareness to improve penetrability rates as currently only around 10% of the Egyptian population have a bank account.
To drive momentum in the area of advocacy and capacity development for crowdfunding campaigns, a one-day Training of Trainers (ToT) was held on the 4th of February at TIEC’s premises, targeting supporting entities working closely with startups and providing them with the know-how to support their startups with accessing alternative finance, and specifically to develop crowdfunding campaigns.
As a third phase for this crowdfunding week, the trainers were then immediately pulled in for support in a three-day Crowdfunding Academy (CFA) workshop led by the AltFinLab, held at the UNDP premises and that was delivered to around 10 startups. The CFA introduced crowdfunding as an impact investment tool, and supported teams with tools and resources that they can leverage to jumpstart their own crowdfunding campaigns. The CFA covered topics related to the design, development and launch of a crowdfunding campaign: from developing a concept and drafting a business plan, to designing and implementing a resource mobilization campaign, leveraging storytelling and graphic design skills. UNDP will then work closely with the startups on the design and launch of their campaigns.
This initiative takes place within the context of UNDP Egypt’s Impact Investment Programme, and the global UNDP programme “SDG Impact”. Both programmes aim to unlock investment for the Sustainable Development Goals by working with the private sector on how best to invest in enterprises and/or investment funds in ways that help achieve the SDGs while delivering on their profit-making bottom line. As it stands, there is an annual shortfall in funding to achieve the SDGs of USD2.5 trillion.