Entrepreneurs and small business owners must consider crowdfunding as means to address the challenge of lack of adequate funding for start-ups, John Ampontuah Kumah, former CEO of National Entrepreneurship and Innovations Programme (NEIP), has said.
Mr. Kumah who is also Member of Parliament for Ejisu, admitted that access to funding remains a major problem for young people who wish to venture into entrepreneurship, and as well as those that are already running businesses and need funds to grow.
“One of the means to achieve that is through crowdfunding. In simple terms, crowdfunding is when businesses or individuals raise funds from a large number of people to finance a new business venture or to expand operations. In some instances, individuals get to own equity in the business they invest in.
In recent times, I have seen the method being used in Ghana, predominantly on social media and particularly on Facebook to solicit funds for the sick and needy. I am of the strong conviction that if we are to tap into such means of raising capital for our entrepreneurs and small business owners, the problem of lack of capital that small business owners are always faced with will be greatly reduced,” he noted in a statement he made in Parliament on Youth Unemployment and Job Creation through the Private Sector.
The MP however added that the absence of a legislation on crowdfunding makes it difficult to implement, as it does not provide protection for businesses and individuals who want to invest through this means.
At the moment, the Securities and Exchange Commission (SEC) which has the mandate to regulate the sector, is formulating a framework plan to formally introduce crowdfunding into the country.
Mr. Kumah implored the Securities and Exchange Commission to expedite the process of formulating the framework, and subsequently forward same to Parliament for passage into law.
“We must impress on them to expedite the process and bring before this House a good framework that allows the Ghanaian businessman or businesswoman to tap into this scheme that has helped entrepreneurs and businesses across the globe to raise the needed capital to create jobs for the unemployed in the society.”
This, he said, when achieved will enable the private sector to help close the employment deficit in the country.
He further added that in a period where the Covid-19 pandemic has and continues to affect countries’ economies, including that of Ghana, there is the need to chart a new path on job creation, built on the back of the private sector to close the unemployment gap.