In the Democratic Republic of Congo (DRC), Africa’s second largest country with a population of 109m, micro, small and medium enterprises (MSMEs) play a pivotal role in the economy. They comprise up to 90% of all businesses, account for 70% of jobs and drive innovation through creative solutions to local challenges.
Yet as in most African countries, MSMEs in the DRC often struggle to access traditional finance such as bank loans, because of their high level of informality, high risk profile and lack of credit information. The challenge is especially acute for businesses led by young people and women entrepreneurs, with women twice as likely as men to be denied a bank loan.
Aware of this funding gap, the DRC adopted an ordinance-law in September 2022 designed to define the rules governing the creation, exercise, promotion and development of entrepreneurship, startups and SMEs. This law mentions the need to facilitate access to innovative financing, including crowdfunding, for Congolese micro, small and medium-sized enterprises and startups.
Leveraging small contributions for big impact
Crowdfunding is the practice of funding a project or venture by raising money – in the form of gifts, loans or equity investments – from many people who each contribute a relatively small amount, typically via the internet. Crowdfunding has the potential to widen financial access for underserved populations and underserved regions. It can also help entrepreneurs to promote their businesses and validate their proof of concept. The practice is growing around the world and, according to a report by the ICR Facility, Crowdfunding: an opportunity to increase access to finance for MSMEs in ACP countries, crowdfunding is taking root in some countries across Asia, Caribbean and the Pacific, though not yet, to any measurable degree, in the DRC.
That report came to the attention of the Federation of Enterprises of Congo (FEC), which serves as both the country’s main employers’ organisation and Chamber of Commerce. Keen to support the growth alternative finance, the FEC requested technical assistance from the ICR Facility to explore the potential and challenges of establishing a regulatory framework and creating a supportive environment for crowdfunding.
In response, the ICR Facility has commissioned an insightful study which benchmarks crowdfunding regulatory frameworks in other countries (France, Ghana, Kenya, Senegal, and Tunisia) and provides recommendations based on this research and on approximately 30 stakeholder interviews. The interim findings of the study were discussed during a stakeholder workshop and presented to the Central Bank of Congo, which has indicated its willingness to take up crowdfunding regulation in mid-2025.
Challenges and workarounds in an underbanked economy
Yet in a country where financial literacy is low, where only 8% of the population has a bank account and 22% have internet access, and where distrust of online financial transactions is high, the challenges to building a flourishing crowdfunding sector are significant. Far from suggesting that crowdfunding is a panacea, the study recognises that it will take time to develop in the DRC and that other instruments, such as patient capital and acceleration funds, may be more appropriate alternatives at present.
On the other hand, notes Lionel Kabeya, the secretary of the National Commission of Young Entrepreneurs at the FEC, informal group funding in the form of “tontines” is well established in the DRC, providing an important precedent for crowdfunding. A tontine is a financial arrangement in which friends, family and/or community members pool money into a common fund that helps individuals and entrepreneurs to save, borrow and invest without needing a bank loan. Moreover, while most Congolese are unbanked, mobile payment services are well established in the DRC. And this is significant because over 20% of crowdfunding platforms in Africa use mobile payment services.
Partnerships for progress and recommendations for success
The study recommends that FEC adopt a public private partnership approach to support the establishment of a regulatory framework for crowdfunding. Key partners include the Central Bank of Congo, which will be the regulator, relevant government ministries and representatives from the finance and tech sectors. It could also involve international donors who can mobilise expertise and provide funding. In Ghana, for example, the United Nations Capital Development Fund and Dutch development agency SNV joined the effort to develop crowdfunding regulation.
When it comes to regulation, the study recommends a staged approach. This would mean first building a framework for crowd giving, which is easiest to regulate since contributors do not expect a financial return. Next, the regulator can focus on a framework for crowd lending, which could include requirements for platform operators, project eligibility, caps on individual loans, protections for contributors and reporting requirements. In a third stage, the regulator can focus on crowd equity investing, which is the most complex instrument.
Another recommendation is to take a ‘sandbox’ approach to regulation. The idea is to begin with a pilot project of a limited duration that would cover a specific sector, region or beneficiary group, such as women entrepreneurs. Starting on a smaller scale enables the regulator to signal its support for innovation and test the platform, governance model and appetite of contributors. Moreover, it allows the regulator to make adjustments before introducing the framework on a national scale.
The study calls for the development of crowdfunding platforms specifically for women entrepreneurs to help catalyse women’s entrepreneurship in the DRC. Kickstarter, the US-based crowdfunding platform, has reported that when it comes to raising early-stage capital on its platform, women are more confident than men to start their own projects, set funding goals similar to men and enjoy higher rates of success.
Regulation must be accompanied by complementary initiatives, dedicated support channels and capacity building, the study argues. These include:
- awareness-raising campaigns to build support and dispel distrust
- training for regulators and platform operators
- tax incentives to enhance the appeal of crowdfunding for contributors and beneficiaries.
It also recommends setting up strategic partnerships to attract investment from the Congolese diaspora. Currently, some 16m Congolese live outside the DRC and their remittances could account for 4% of GDP. Many of these remittances are currently spent on goods and services, but crowdfunding could open new investment opportunities for diasporans and boost funding for MSMEs in the DRC[1].
Advocacy and outreach: keeping crowdfunding on track
Once finalised, the study will serve as an advocacy tool and roadmap for the FEC. The top priority is to maintain a strong public-private dialogue with the Central Bank lest the initiative lose steam. And the FEC has much to offer in this regard. For one thing, it can share the study’s key findings with the BCC and propose a detailed “crowdfunding action plan” covering everything from capacity building for the regulator to support in drafting regulation. The FEC can also help bring onboard key stakeholders such entrepreneurs and fintechs as well as development organisations offering technical and financial expertise. Together, they can help
accelerate the creation of the legal framework for crowdfunding and support the emergence of local crowdfunding platforms.
Additionally, the FEC can play a vital role in raising awareness and building trust among entrepreneurs and potential investors of what crowdfunding is and how it works, notably by promoting real life examples of successful crowdfunding campaigns via social media and in-person events. For instance, it can help organise short, interactive crowdfunding presentations in accelerators, co-working spaces and chambers of commerce in major urban centres like Kinshasa, Goma and Lubumbashi.
At the same time, Lionel Kabeya advises reaching out beyond the “usual suspects”. Specifically, he mentions linking up with religious institutions, which already play a significant role in raising funds for humanitarian and social projects in the DRC, including in some cases through microfinance. He thinks they could become influential allies in promoting understanding, addressing skepticism and helping crowdfunding become established.
The success of these efforts is also contingent on broader factors. These include the imperatives of enhancing internet access and financial inclusion as well as restoring public trust in online financial transactions after a spate of high-profile scams that defrauded Congolese investors. Despite a difficult environment, promising trends are underway that can be built on to promote crowdfunding.
[1] If you are interested in supporting Diaspora entrepreneurship to boost ACP country development, have a look at our ICReport – https://www.icr-facility.eu/knowledge-hub/resource/supporting-diaspora-entrepreneurship-to-boost-acp-country-development/
This publication is part of an intervention supported by the Investment Climate Reform (ICR) Facility. The ICR Facility is co-funded by the European Union (EU), the Organisation of African, Caribbean and Pacific States (OACPS) under the 11th European Development Fund (EDF), the German Federal Ministry for Economic Cooperation and Development (BMZ) and the British Council. The ICR Facility is implemented by GIZ, the British Council, Expertise France, and SNV. The contents of this publication are the sole responsibility of the author and do not necessarily reflect the views of the donors or the implementing partners
