Crowdfunding Will Accelerate Financial Inclusion, Says SEC

The Securities and Exchange Commission (SEC) has said that the operationalisation of crowdfunding will accelerate the financial inclusion agenda in Nigeria, in addition to increasing the quantum of investible funds by unlocking the untapped capital in the economy.

Executive Commissioner Operations SEC, Mr Dayo Obisan stated this at a webinar with the theme “Accelerating Financial Inclusion through Crowdfunding.”

Crowdfunding platforms are websites that enable interaction between fundraisers and the crowd. It is in line with this that Crowdfunding has garnered a lot of attention from regulators across jurisdictions because of its potential to further financial inclusion efforts.

Obisan said the event hosted by the SEC is the first in a series since the Commission’s Rules governing crowdfunding became effective in January 2021 with the main objective of “investor safety” and that it aimed at providing a platform for knowledge and experience sharing among participants.

“It is also to raise awareness of participants, and indeed Nigerians, on crowdfunding as a funding mechanism for Start-ups and MSMEs, to enlighten them on experiences and lessons on crowdfunding from other jurisdictions as an alternative way of investment and financing of businesses.

He described crowdfunding as a new phenomenon growing in popularity in Nigeria, adding that the platform is an innovative source of finance that provides MSMEs, and startups the avenue to raise capital from the crowd (populace) by harnessing the power of the internet.

According to him, “in realisation of the potentials of crowdfunding, the Commission’s Rules issued in January 2021, has taken concrete steps to improve the regulatory framework for crowdfunding by the introduction of the operational framework between the fundraisers and the investing public in Nigeria.

“The framework amongst others makes it mandatory for any investment-based Crowdfunding to be operated only by crowdfunding intermediaries through the issuance of investment instruments. This will no doubt provide an additional opportunity for MSMEs, startups, and the general public to have quicker fundraising options.