Starting or scaling a business in Africa is not for the weak. Various road blocks require great strength, especially when funds are difficult to come. You may have the greatest idea and the strongest will, but your vision will be rapidly separated without the capital.
Many businessmen in Africa do not fail because they are slow or neutral. Most of the times, these are the things that are like funding that are beyond the control of the businessman who brings down the business. It is difficult to try to fund a business in Africa, but nothing is impossible. If you know where to see, who to ask, and how to prepare, then the funds will not be difficult in Africa.
In this article, I will find 10 opportunities for business funds in Africa.
1. Personal savings and family assistance
Let’s start with the most common and most often neglected source of business funds in Africa: the money saved from your efforts, or in many cases by your family.
Many businessmen in Africa actually eliminate their startup funds from their own pocket. Some save for months or years, while other parents can rely on the slightest contribution of siblings, or dear friends.
This form of fundraising may not be shiny, but it teaches you discipline. It may not be enough to raise your dream to a billion dollar company, but it may remove you. And often, starting small can be as per your need.
2. Angel investor
Angel investors are people who find and invest in promising startups. Once they look at the potential in a business idea, they spend their money to help grow business.
Angel investors may not be very common in Africa, but if you know where to see, you can find them. Fast, cities like Lagos, Nairobi, Cape Town, and Cairo have networks of people who are ready to put money in startups. However, they want to see passion, a concrete plan, and indifference to learning.
This can be the best option for those who are looking for a little patronage to go with the money.
3. Venture Capital (VC)
Venture Capitalist firms that later invest in startups with a big return. These firms only put their money into the ideas that have the potential for greatness.
VCS access is not easy in Africa. It’s competitive, and they often expect you to get some traction already. Consumers, sales, or media attention. But if you have already started and are growing very fast, VC can be fuel that you need to explode.
4. Bank lone
This is one of the easiest ways to get funds for businesses. You do not have to save a long time or do not need to rely on the mercy of an angel investor or VC. You can only get a loan by going to the bank. However, most African bank startups are not friendly, and you have to pay interest on the loan you collect. It may be simple, but it is also the most dangerous.
African banks prefer to lend a large number of suicide attack companies. Small businesses and young adults who do not have land or big deals have to go through a rigorous process before lending.
5. Microfinance Institution (MFIS)
If getting a bank loan is not doing good for you, you can try the microfinance company. MFIs were formed to support small -scale businessmen, market women, craftsmen, small farmers, and similar small -scale traders. These loans may be small, but for many people, this is the first and most important step.
You don’t always need suicide attack, but mostly you will need guarantee and become a member of a group. The negative aspect is that the payment period is short and the interests are high, so do not borrow the money you cannot repay.
It can’t make you a billion leaves overnight. But when you build, it can keep your stirring efforts alive.
6. Business competitions and start -up grants
If you believe you have great potential in your business, you can compete against other traders and win funds for your business. You have to offer your idea, explain your model, and, if the judge believes you, you have the opportunity to funding and/or teachers.
Such competitions and grants are becoming more and more popular in Africa. The most notable includes:
- Tony Elumo Foundation
- Injesha prize
- The reward of the Orange Social Plan
- Seed star Africa
Like any competition, the process is difficult, and you do not guarantee a win. You will need compulsory suggestions and sometimes a pitch in front of the Judging Panel. However, if your sentence is strong and you are willing to work hard, it may be a way to get an equity or a loan without borrowing.
7. HIGHT FUNDING
The Crude Funding Platform allows you to tell your story and encourage people to support your plan, either by donating, already ordering, or taking equity stakes in your organization. It is just like getting dozens of small investors instead of a large.
In Africa, Thundand (South Africa) and Startomagad have helped many locals raise money for their companies. As long as your story is connected, you may also consider running your funding campaign using a global platform such as Gofundme, Kickstarter, or Indigo.
If your business is a social angle or a product that enthusiasm people, it does the best.
8. Co -operative society and a rotating savings group
Depending on what part of Africa you are from, you may have heard these terms: “Esuso,” “Chamas,” “Tonatines,” or “Stoke Wells”. They are an elderly savings system in which members contribute monthly and turn to the knot.
They are mainly used to build weddings, school fees, or houses. However, businessmen can use them as bad seed capital for their business.
The beauty of this scheme is confidence and community. You don’t need to please strangers- you are working with people you know. Probably not in terms of millions, but it works for small -scale business.
9. Suppliers and Customer Credit
Sometimes, the third party that provides you with funds may not be a banking institution. It can come from your business partners.
Imagine that you run a small restaurant. Instead of paying cash to supply raw food, you talk to your supplier for 30 days after paying. Or you are a tailor, and your client pay a deposit that covers the material cost before you start sewing.
This is called commercial credit. And this is a real strategy that smart businessmen use.
It works on confidence and experience, so relationships are essential. The more reliable you are, the more flexible your partners. And the best thing is that you will get to grow without debt!
10 Official programs and public schemes
It is very easy to declare government programs incredible, but some have helped to create real business. Many African governments have developed such programs to help small businesses, especially youth and women. They include:
- Boy (Bank of Industry) in Nigeria
- Ozo Fund in Kenya
- GEA Support in Ghana
- SIFA in South Africa
They can offer loans for grants, grants, training and tools. Awareness and corruption are the biggest challenges. However, if you put your ear on the ground, you can only benefit. Just don’t expect smooth shipping. It will have patience, paperwork and perseverance.
Conclusion
Do not let your dreams die due to lack of financial support. There are several ways to fund your start in Africa. As long as you want and drive, you will find a way to fund your business. If you feel stuck, the above 10 funding opportunities are a great starting place.