The Securities and Exchange Commission of Ghana (SEC) and the UN Capital Development Fund (UNCDF) have jointly launched comprehensive guidelines for equity crowdfunding in Ghana.
Developed with the support of Lelapa African FinTech Advisory and in collaboration with key stakeholders, these guidelines aim to harness crowdfunding as a viable financing option for Micro, Small, and Medium Enterprises (MSMEs) and startups while ensuring investor protection and addressing critical gaps in the entrepreneurial ecosystem.
The newly launched guidelines are designed to unlock the potential of crowdfunding for MSMEs and startups, provide a robust regulatory framework to protect investors, foster innovation and address the gaps that have hindered the growth of entrepreneurship in Ghana.
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Ghana’s investor protection and regulatory framework
A significant focus of the guidelines is on investor protection and fostering a secure investment environment. Key provisions include:
Transparency: Crowdfunding platforms are required to provide clear and comprehensive information about investment risks and potential returns.
Rigorous licensing process: Platforms must undergo a thorough vetting process based on their business model, governance structure, and financial stability.
Collaborative ecosystem: Encouragement of partnerships between crowdfunding platforms, banks, microfinance institutions (MFIs), and investment funds to create a seamless financial ecosystem.
The guidelines apply to a broad range of entities, including crowdfunding intermediaries, companies seeking to raise funds and foreign entities interested in operating crowdfunding platforms in Ghana.
In addition to supporting traditional business ventures, the guidelines also prioritise crowdfunding for social and environmental impact projects, fostering an environment where both innovation and investor security can thrive.
Industry reactions
Rev. Daniel Ogbamey Tetteh, Director-General of SEC, highlighted the transformative potential of crowdfunding: “In Ghana, we have witnessed the transformative power of crowdfunding in various sectors. From agriculture to healthcare, entrepreneurs have harnessed the collective strength of the crowd to bring their ideas to life.
However, the absence of a clear regulatory framework has limited the full potential of this innovative financing model. The guidelines we launched today are designed to change that. They provide a robust framework that protects investors, ensures transparency, and fosters trust in the crowdfunding ecosystem.
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By establishing clear rules and standards, we are creating an environment where both investors and fundraisers can thrive.”
Arianna Gasparri, Technical Lead at UNCDF, expressed her satisfaction with the collaboration stating that they “are very happy to have worked with SEC in contributing to the future of investments and innovative channels for supporting MSMEs in Ghana.
UNCDF is indeed meant to work with government and government agencies to assist with the favourable conditions to crowd-in private capital.”
The introduction of these guidelines marks a significant milestone in Ghana’s financial sector. By establishing a clear regulatory framework, the SEC and UNCDF aim to unlock the full potential of crowdfunding, encouraging more innovative financing solutions and fostering a vibrant entrepreneurial ecosystem.
This initiative is poised to not only boost the growth of MSMEs and startups but also enhance investor confidence and protection in the crowdfunding space.