In recent years, crowdfunding and peer-to-peer lending platforms have gained traction in Ghanaian society. The concept of crowdfunding has always existed with individuals and groups sourcing donations from well-wishers and investors within their network to support development projects or invest in economic ventures, especially those at the start-up stages. Lately, technology has brought these concepts to the global level: fundraising can be done via digital platforms and individuals with business ideas can look for supporters from around the globe.

While this is opening doors to bridge the financing gaps for early-stage businesses, some concerns arise regarding the regulation of such a market, as pointed out in UNCDF’s article Best Practices from Ghana for an Enabling Regulatory Environment for Crowdfunding.

In Ghana, some policy efforts to regulate the market started in 2021 with the Bank of Ghana releasing the first guidelines for donation and reward-based crowdfunding. However, Debt (or Peer-to-Peer lending) and Equity models which deal with securities and loans will fall within the regulatory jurisdiction of the Bank of Ghana and the Securities and Exchange Commission (SEC). In April 2022, SEC shared with key stakeholders the first equity crowdfunding policy guidelines of its kind.

UNCDF is pioneering crowdfunding in Ghana under the GrEEn Project by supporting the ecosystem in developing new business models that could help channel investments for segments excluded from traditional finance. To this end, advocating and supporting a conducive regulatory environment becomes crucial for the private sector to build on these models while protecting investors and fund recipients. Participatory approaches are key to ensuring all the parties are involved in defining new policies to better reflect the interests and risks of the business environment, strengthen best practices, enforce implementation and broaden ownership of the process by all key stakeholders.

By leveraging its convening power and its role as an ecosystem facilitator, UNCDF adopted a phased approach to initiate a consultative process with the private sector that could inform the SEC policy formulation. The approach entailed the following, among others:

• Leveraging UNCDF’s network of providers to ensure good representation of the critical stakeholders in crowdfunding and bring them together to participate in the consultations
• Providing technical support to assess the guidelines with the private sector to ensure all concerns were captured, sharing best practices and ensuring the representativeness of smaller players that individually could not be represented
• ·Convening public and private dialogues to facilitate exchanges on the concerns of the private and public sectors and inform the policy process.

The engagement culminated in a workshop hosted by UNCDF and attended by high-level representatives from SEC to discuss and engage with crowdfunding providers on critical issues that affect the sector. From SEC, Mr Emmanuel Ashong-Katai, Head of Policy and in charge of the guidelines, led the discussion and engaged with players. The event’s objective was to ensure the interests and concerns of industry players were captured and considered by the SEC before the guidelines were fully operational.

Ophelia Oni, Digital Finance Expert at UNCDF who facilitated the workshop, said,
“UNCDF is pleased to have SEC at this public-private dialogue as it shows the high commitment of the regulators to ensure the guidelines are robust but fair enough to allow the fledging crowdfunding sector to grow and create space for more entrants. Thanks to the GrEEn Project, UNCDF is pioneering innovation in Ghana, and we look forward to seeing crowdfunding as the next frontier for investors and early-stage businesses”.

Deborah Mawuse Agyemfra, Deputy Director (Legal) at SEC, commented, “The process of engaging stakeholders before issuing policy guidelines is integral to the SEC’s process. Therefore, the SEC appreciates the very fruitful exchange organized by UNCDF on the draft guidelines for crowdfunding.”

The workshop ended with recommendations that will be addressed in the policy revision and finalization. SEC will deliberate on the critical outstanding issues highlighted during the discussions and engage further with stakeholders. UNCDF stands with the financial ecosystem and will continue to engage with the stakeholders to drive the innovation agenda in Ghana, ensuring no one is left behind in the digital era.