Page 6 - THE NOTICEBOARD EDITION 62 SEPTEMBER 2020

Page 6 September, 2020
SEC to Introduce Crowd Funding in Ghana

finance credit has often

led to repayment defaults
and consequent loss of

collateral ultimately
culminating in total

business failure.

Crowd financing, however,

will offer low cost, long
nterprise. This term capital in the form of

requires a potential to transform the
equity to MSMEs and even
eregulatory MSME landscape in Ghana, debt financing would be

framework that is which is dominated by
offered at much lower
minimal but effective enterprises that lack cost than through micro-

with regards to basic access to adequate funding financiers since by
investor protection. from formal financial bringing investors and
intermediation sources
entrepreneurs into direct
Crucially, SEC's such as banks and the contact, financial
regulatory framework stock exchange.
intermediaries who
requires that specialist demand wide interest
financial firms will be While the microfinance margins – ostensibly to

licensed to provide crowd industry was established to compensate them for high
funding services, which solve this problem, a credit risk – would be

will involve bringing combination of excessively eliminated.
together potential high lending rates and very

investors and deserving short loan tenors, as well Crowd funding is one of
entrepreneurs, and as poor risk management the fastest-growing
ensuring that beneficiary practices and outright business financing modes
enterprises are managed financial malfeasance by

responsibly so as to meet micro-financiers has

their obligations to limited its use primarily to
crowd-investors. the trading sector and
provision of bridging,

Financial analysts and working capital for
business development enterprises in other

experts alike agree that sectors.
properly implemented,

crowd financing has the The terms of micro-
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