The Securities and Exchange Commission (SEC) in Ghana is currently formulating a framework plan to formally introduce crowdfunding into Ghana. The commission expects to have established a framework implemented by early next year with a legal framework in place.
What Is Crowdfunding?
Crowdfunding in this context is where start-ups and early-stage private companies can raise funds (both debt and equity) from a large number of individuals to finance a new business venture.
With crowdfunding, small companies can leverage on their networks including social media and expand their pool of investors to helping to raise funds.
Popular crowdfunding funds such as Seedrs, have an equity crowdfunding model where individuals or others can get equity by personally investing in a company.
Effects Of Crowdfunding Framework
Once a framework has been put in place and is back by legislation, micro, small and medium-sized enterprises, could start to raise capital quickly without having to go through other processes to secure funding through banks or Venture firms but will still have to go through scrutiny and compliance.
Emmanuel Ashong- Katai, SEC’s head of policy, research and IT stated that the framework being designed by SEC aims to ensure that investors are protected from fraudulent entrepreneurs and would enjoy some level of good corporate governance, and limits their risk exposure to the usual business risks faced by direct investors in financing private enterprise.
Source: GoldStreet Business