Comparative Analysis of the Classic Financing System (Bank) and the Modern Financing System (Crowdfunding) Adapted to Congolese Entrepreneurs: Choice and Perspective (Revue Internationale de la Recherche Scientifique (Revue-IRS))

Summary

• According to the World Bank, small and medium enterprises provide more than half of formal jobs in the worldp.2
• Crowdfunding established itself as a credible financing method capable of supporting millions of projects in 2013p.2
• The term crowdfunding was first used by Michael Sullivan in 2006 when launching a video blog incubatorp.3
• Crowdfunding platforms generally charge a commission of 5 to 8% on total funds collected when campaigns succeedp.5
• The Agrowfunds crowdfunding platform requires agricultural businesses to show at least 18 months of operational activityp.6
• Agrowfunds targets agricultural financing project costs within a scale of $15.000 to $100.000p.6
• Commercial bank lending rates in the Democratic Republic of the Congo are high, often >15%p.8

Key insights

1. Small and medium enterprises in Sub-Saharan Africa face significant growth hurdles due to restricted access to traditional bank creditp.2
2. Crowdfunding platforms act as digital intermediaries connecting project owners with individual investors using Web 2.0 toolsp.3
3. Speculative crowdfunding allows investors to receive financial returns via royalties, interest-bearing loans, or equity sharesp.5
4. Commercial banks in DRC like Equity BCDC require SMEs to submit financial statements and real estate or financial guaranteesp.6
5. The platform Agrowfunds restricts its agricultural crowdfunding coverage to regions located within 150km of Kinshasa and select provincesp.6
6. Traditional banking offers high financial capacity under Central Bank supervision but excludes informal and young entrepreneursp.7
7. Crowdfunding offers rapid capital raising for innovative Congolese projects, but growth is hindered by the absence of a specific legal frameworkp.8