Respite for businesses as Agbakoba pushes for crowdfunding finance

For Nigerian businesses, specifically, the small enterprises, beleaguered by lack of finance due to stringent conditions by the conventional banks, there is hope as Olisa Agbakoba Legal pushes for (Crowdfunding) alternative financing.

Crowdfunding is alternative financing by which small businesses; corporate organisations and individuals can raise money from the general public through an online portal called a Crowdfunding Portal.

Currently, there are some 1000 Crowdfunding portals worldwide supporting a multi-billion dollar industry. Global Crowdfunding experienced accelerated growth in 2014 to reach $16.2 billion in the United States. In 2015 the industry raised over $34.4 billion.

“Funds raised by way of Crowdfunding ensure that small businesses have the credit to grow their business, which in turn creates jobs and stimulates economic growth”, Bisi Akodu, partner, corporate/ commercial and public sector group, Olisa Agbakoba Legal told journalists in Lagos.

She explained that there are three broad platforms for Crowdfunding, philanthropic and promotional that allow individuals and charities raise money for philanthropic causes and artist promotions through online donation portals.  The second and third platforms are for investment; these provide for both debt and equity online transactions, referred to as Equity-based Crowdfunding and Loan-based Crowdfunding.

However, the law firm seeks legal and regulatory framework this alternative source of financing, as there is no specific crowdfunding legislation in Nigeria.

Akodu acknowledged that in many countries like Nigeria, soliciting finance from the general public without legal authorization is considered illegal.

“Nigeria has seen a tremendous rise in the use of online platforms; we have seen the success of online shopping portals and more recently online gambling. Although crowdfunding has not taken deep root in Nigeria, there is a certainty that it will and when it does, we must ensure that we have the enabling legal and regulatory framework to support this massive innovation”, she said.

Akodu was concerned that there are some bills that still pending before the National assembly that have not been passed. Such bills include the financial sector bill, consumer credit bill, the credit reporting and information and exchange bill, e-transaction bill, the international financial centre bill, insolvency bill.

“All these bills, if they are passed will accommodate all these innovations in financial products, which Crowed if one of the products we are promoting,” she added.

Akodu further said, “establishing the legal and regulatory framework for crowdfunding is a pragmatic move for SEC, which should involve a holistic review of our securities laws, company legislation and other related legislation. The ongoing study should not be restricted to the Ontario Stock Exchange but should be broadened to include the UK that has similar laws as Nigeria. The next step will be for Securities and Exchange Commission (SEC) to adopt a robust plan to ensure that crowdfunding in Nigeria becomes a reality.