African communities and M-Pesa help crowdfund R7.7m for 75 pioneer innovations

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An investment fund for African startups has successfully crowdfunded €175 000 (R2.3m) for innovative new companies on the continent, a whopping 18% of which was contributed by ordinary citizens using the M-Pesa mobile money service.

The Cheetah Fund was set up by the 1% Club, a European crowdfunding site, together with the Dutch National Postcode Lottery, Nailab, mLab, iBiz and iHub last year. Candidates whose ideas are accepted are given the opportunity to raise 30% of their requested budget in Euros via crowdfunding and have the remaining 70% contributed by the fund.

Seventy five projects out of 109 campaigns were successfully backed and the Cheetah Fund contributed an additional £400 000, bringing the total funding up to €575 000 (over R7.7 million). One of the more unconventional methods the fund employed was mobile money donations in Kenya.

A partnership with M-Changa, a fundraising management platform in Kenya, introduced M-Pesa as a way for finalists based in the East African country to get locals to back their projects by simply SMSing a particular project’s code and the amount they wanted to donate.

Considering the fact that M-Pesa currently has over 17 million users in Kenya, this was a big advantage for the Kenyan finalists and resulted in more than €34 000 contributed to almost 30 projects through the mobile money service alone.

“During the program we tried to answer questions like ‘can crowdfunding be a viable alternative financial means for pioneers who want to kick start their social or environmental projects?’ and ‘is it possible to employ local crowdfunding to generate support for these projects in pioneers’ own communities’, the Cheetah Fund report says.

“We found that establishing the right partnerships, implementing local payment methods like M-Pesa and an enticing communication campaign, it works.”

Cheetah Fund projects

The 75 successful Cheetah Fund projects originated from 21 African countries including South Africa with most projects focusing on social entrepreneurship (15.9%), education (14.1%), ICT (13.5%) and community building (13.5%).

A few stand-out projects include Hope Mwanake’s “Trash is Cash” waste recycling program in Kenya which turns glass and plastic into eco-friendly roof tiles for houses instead of using sand and clay.

The Young Women Citizen Engagement and Leadership with ICT Program (FTIC in French) trains groups of young women in Benin on how use of Facebook, Twitter, crowdfunding, blogging, LinkedIn and Instagram to effect social change in their communities and places of work.

Mukeli Matei’s Fishmate platform links members across the Kenyan fishing community so as to track and monitor fish production to allow transparency in fish trading. It alsos provide a mobile marketplace where fishermen can access data on market-competitive prices offered by suppliers.

With the €5 000 (R67K)  raised on The Cheetah Fund, Ebrima Dem will set up an app incubator in Gambia that will churn out mobile apps targeted at farmers in the country, providing them with relevant trade information, a marketing platform for their products and information on improved farming techniques.

RLabs Zlato exchange app offers unemployed youth in South Africa the opportunity to earn virtual currency for doing volunteer work in their communities. Using the €14 530 (approx R200k)  raised on The Cheetah Fund, RLabs will build on the existing Zlato prototype.

Access to safe and reliable hospital transportation for residents in Uganda’s Kameke village is a serious issue that often puts villagers’ lives at risk. The Good Shepherd Care Ministries’ Village Ambulance is a cost-effective and light custom-built trailer that can be pushed by hand and can be pulled behind a bicycle or motorbike which offers a safer way of transporting patients on bumpy roads.

A shift in crowdfunding in Africa

One of the biggest lessons The Cheetah Fund says it took away from the campaign was the discovery of a different approach to crowdfunding in Africa, which it says is a tough funding method to crack for entrepreneurs across the continent.

“For years, we have tried to stimulate crowdfunding in Africa, but it has often proved difficult. We believe, however, that we have now succeeded in developing a proven concept by offering a matching fund in combination with the right tools such as bootcamps, intensive community management, and the local mobile payment system M-Changa,” the fund says.

“We’ve also seen that local crowdfunding works and has a lot of potential as a means to raise significant funds locally. During the 30-day trial the Cheetahs managed to raise more than €32.500 within their own communities. We feel that this shift in mind-shift in raising funds within your own network could have a truly positive impact on sustainable development.”

You can read the full Cheetah Fund report on the 1% Club.