The We can take the example of APIX,

The Financial and Economic environment of start-up in
Senegal: impact of crowdfunding on the Senegalese economy.

Abstract

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

Nowadays in Africa
particularly in Senegal, Governments are aware of the fact that supporting new
start-ups is the one best way to development. That’s why entrepreneurship
occupies a considerable part in the context of the Senegalese emerging plan
(PSE).

We notice that
there are more and more new entrepreneurs and an increasing number of
organizations which support those start-ups in Senegal. We can take the example
of APIX, ANPEJ and many other structures. But these structures don’t help them
effectively to find money to run their enterprises; they only focus on the
training and the administration aspects. New young entrepreneurs are facing
many difficulties to get loans from banks or investors though the traditional
way (contact a loan).  We need to mention
about the misunderstanding between banks and new projects: this problem can be
explained by the fact that we notice that generally new projects cannot be
financed by banks because of a high risk rate. Banks don’t like to invest on a
project which just starts its activities because they don’t want to cover the
loss. This is one of the characteristics of banks

My experience and
my studies teach me that there should be a better way to help them bypass those
empiric bank loans and reduce the risks related to that one. Basically my
solutions goes through two main drafted suggestions:

•           Find a financial technic which could
arrange both banks and the start-ups)

•           To create an organization or a crowd
funding website which could help these start-ups find money for their
exploitation.

In a nutshell,
crowdfunding is the main solutions. This research goal is to evaluate the
impact of crowdfunding on the Senegalese economy. We will proceed by analysing
the economic situation of Senegal through the World Bank report and some other
secondary data. Then  we will measure the
impact of crowdfunding in other referenced countries South Africa and Kenya.
Basically for this part we will measure the impact on the GDP and the
entrepreneurship level. And also find the reasons why there so many
crowdfunding website in there. In the later part we are going to do a deep
feasibility analysis. The analysis will be about building an economic model
around the impact of crowdfunding on the GDP of Senegal using some secondary
Data. Then we will conclude the paper by mentioning some limits and drawbacks
of crowdfunding. The other characteristics will be found in a deeper study
through the following plan.

Introduction

1)     
HISTORIC
OF THE PROBLEM

We will talk about the context of the emergent
Senegalese plan it’s also for the purpose of knowing much more details about
the subject. We will do it by trying to find the origin of the problem and its
impacts. This part is very important because it’s like an introduction and will
help us know how we will tackle the study of the two antagonistic parts.

INTRODUCTION

 The origin of
the thesis

This thesis come
from the fact that we notice that in Africa there is a lot of start-ups but the
crowdfunding website to support those start-ups are very few and unequally
distributed, South Africa itself group more than 40% of all the African based
crowdfunding organisation while in Senegal we only have 2 crowdfunding
websites. Same situation is noticed in whole West Africa excluding Nigeria
which one of the strongest West African countries.

 Impact of the
thesis

This report will us
help identify the barriers to the development of entrepreneurship and to
crowdfunding. Through this we will find solutions to make Senegal better trough
supporting start-ups and the informal sector.

 Objectives of
thesis

Measure the impact
of crowdfunding in the Senegalese economy using other countries model. Find the
reasons why we should find a reasons we should support Senegalese
entrepreneurship and showing the success rate of Senegalese start-ups through
crowdfunding

Chapter I: The economic situation

Plan Senegal Emergent

Senegalese economy
in general

 

 

Chapter Entrepreneurship in Senegal

Chapter 3: crowdfunding in Senegal

What is crowdfung

How does it work?

What kind of crowdfunding form exist

What are the one we are interested on

The situation in senegal

Example from South Africa (details)

Chapter 4: quantitative evaluation of the impact

Economic model

Data analysis

Interpretation

Conclusion

 

 

 

 

What is crowdfunding?

Crowdfunding is the use of small amounts of capital
from a large number of individuals to finance a new business venture.
Crowdfunding makes use of the easy accessibility of vast networks of people through social media and
crowdfunding websites to bring investors and entrepreneurs together.
Crowdfunding has the potential to increase entrepreneurship by expanding the
pool of investors from whom funds can be raised beyond the traditional circle
of owners, relatives and venture
capitalists.

BREAKING DOWN ‘Crowdfunding’

In the United States, crowdfunding is restricted by
regulations on who is allowed to fund a new
business and how much they are allowed to contribute. Similar to the
restrictions on hedge fund investing,
these regulations are supposed to protect unsophisticated or non-wealthy
investors from putting too much of their savings at risk. Because so many new
businesses fail, their investors face a high risk of losing their principal.

How Crowdfunding Works

Crowdfunding has created the opportunity for
entrepreneurs to raise hundreds of thousands or millions of dollars from anyone
with money to invest. Crowdfunding websites such as Kickstarter and Indiegogo
attract thousands of people hoping to invest in the next big thing. In 2015,
nearly 80,000 people put up more than $20 million on Kickstarter for a company
that developed a smartwatch alternative to the Apple Watch.

Crowdfunding provides a forum to anyone with an idea
to pitch it in front of waiting investors. One of the more amusing projects to
receive funding was from an individual who wanted to create a new potato salad
recipe. His fundraising goal was $10, but he raised more $55,000 from 6,911
backers. Investors can select from a hundreds of projects and invest as little
as $10. Crowdfunding sites generate revenue from a percentage of the funds
raised.

What’s in It for Investors?

Many crowdfunding projects are rewards-based;
investors may get to participate in the launch of a new product or receive a
gift for their investment. For instance, the maker of a new soap made out of
bacon fat sent a free bar to each of its investors. New video games are a
popular crowdfunding investment for gamers, who are rewarded with advance
copies of the game.

Equity-based crowdfunding is growing in popularity
because it allows startup companies to raise money without giving up control to
venture capital investors, and it offers investors the opportunity to earn an
equity position in the venture. Investments in equity-based crowdfunding
ventures are regulated by the Securities and Exchange Commission (SEC).

Why crowdfunding

Different types of crowdfunding

In 2014, half of the active African crowdfunding
platforms were rewards-based platforms. In 2015, the dynamic swiftly changed:
the most popular crowdfunding models
were donations-based (37%) and equity-based (33%) platforms.

This stems from the closure of 2 South African
rewards-based platforms in 2015. The website Trevolta which funded trips
for travelers shut down in 2015; and so did the crowdfunding platform for
customized T-shirts Design4T. At the same time, six new donations-based
platforms that fundraise for social causes and community projects were launched
in 2015. Four new equity-based crowdfunding platforms were also created that
year.

Donations- and rewards-based crowdfunding platforms are
clearly geared towards funding social causes and creative & innovative
projects. 65% of the crowdfunding projects listed on donations-based platforms
are fundraising for various social causes, such as social welfare, local
community initiatives, medical expenses, charity projects, etc. On the other
hand, rewards-based platforms are equally suited to fundraise for social causes
(31%) and for creative and innovative projects (38%). The creative and
innovative campaigns launched in rewards-based platforms range from films &
videos, arts performance and events, design, publishing, among other projects.

Equity-based crowdfunding platforms are
primarily used to fund start-ups, microenterprises, and SMEs (47%). They are
also used to invest in residential and commercial properties (32%).

Peer-to-peer lending crowdfunding platforms are
sector-focused, and only fundraise for business and entrepreneurship projects.

Success rate of crowdfunding
in some African countries

 

 

Crowdfunding in Senegal: situation

I Senegal
crowdfunding is not that common, however we have to main African based crowd
funder which are ……. In addition to that we have another form of crowdfunding
called “tontine”. It’s a French word
that means participation. The idea turns around mutual funding. I mean a group
of mainly women, gather and cottise every month a lump sum. And at the end of
every month a lottery is made and the winner of the lottery will take the sum
of those participations and has to wait until all the others to win the lottery
in order for her to win again. But drawback on that is that it’s not for a
formal business purpose. It’s mainly for them to prepare their small business
and for events like weddings, baptisms or others.

Measure of crowdfunding’s economic impact in S.A and
Kenya and Nigeria

A brief summary
through

 

 

 

 

 

 

 

 

 

 

 

                                                           
source: Wikipedia.com

 

After decades of very modest growth, particularly from
2007 to 2013, in 2014 the Government of Senegal adopted the new Plan Senegal
Emergent (PSE) designed to help the country get out of a cycle of low-growth
and weak poverty reduction. Greater competitiveness, punctual progress in
structural reforms, and a favorable external environment all mean economic
growth has recently accelerated, reaching about 6.5% in the past 2 years and
making Senegal one of the best performing economies in Sub-Saharan Africa. Almost three
quarters of the 2015/16 higher growth (compared to the low growth period
of 2005–2013) is due to a higher contribution from exports, whose volumes
increased by almost 15% and 13% in 2015 and 2016 respectively, underpinned by a
more diversified base in agriculture, fishing, and mining. Higher consumption
accounted for around 10% of the higher GDP growth, reflecting the positive
effect on national income of both a good harvest and improving terms of trade
(lower prices for energy and food imports). At a sectoral level, the higher
growth in both years was mainly attributed to larger contributions from the
agriculture and industrial sectors. In short, Senegal’s recent uptick in
economic growth reflects stronger international competitiveness, incipient structural
changes and, to a lesser extent, favorable exogenous factors, such as positive
terms of trade favorable climatic conditions. Other macroeconomic indicators
are showing positive trends, although public debt is trending upwards. The
fiscal deficit also narrowed in the last few years, to 4.8% of GDP in 2015 and
4.2% in 2016. It is expected to settle at 3% in 2018.

Entrepreneurship
level in Senegal

Formal sector

According to the world bank.. Of the Senegalese
economy take its revenue from services. Furthermore these services are mostly
around commerce, buy and sell several merchandises. However this sector is
still away very informal and required a lot of help and support and of course
investment to help these businesses grow significantly.

Informal sector