New policy to regulate crowdfunding coming

11May 2022
Francis Kajubi
The Guardian
New policy to regulate crowdfunding coming

BOOM in crowd funding through pyramid schemes by FinTech and Start-up innovators mostly operating on social media platforms will soon start operating under a new policy.

Director of Research, Policy and Planning, Alfred Mkombo.

The underway policy will among other things obligate the latter to list at the Dar es Salaam Stock Exchange (DSE) market for them to raise money through crowd funding from the general public for investment purposes.

An increase in pyramid schemes calling for investors through crowd funding has prompted the Capital Markets and Securities Authority (CMSA) in collaboration with the United Nations Development Programme (UNDP) and the Bank of Tanzania (BoT) to start framing such a new policy.

Speaking yesterday in Dar es Salaam at a special dialogue with stakeholders on innovative financing model in Tanzania ahead of the Innovation Week 2022 to commence next week, CMSA Director of Research, Policy and Planning, Alfred Mkombo said that online FinTech and Start-up businesses needs a bold regulatory framework that will protect people from losing their money.

“We have started framing a new policy to guide online FinTech and start-up innovators, especially those who campaign for the general public to invest their money in return for handsome profits. However, the policy targets at promoting candid FinTech and start-up innovators,” said Mkombo.

According to him, it is high time for innovation in the capital markets to take the lead in creating an enabling environment for operation and regulation of crowd funding in Tanzania that had left hundreds of citizens swindled away their hard earned money by bogus start-up innovators.

Funguo Programme Manager at UNDP, Joseph Manirakiza, said that the programme, which is being funded by the European Union and the UK Aid among other objectives, targets at promoting the country’s innovation sector by making sure that FinTech and Start-up innovators operate legally.

“The other objective of the programme is supporting innovators in the FinTech and Start-up sectors to grow and attract confidence by large investors to invest in their innovations. We support them financially, with new technologies and in skills and capacity building” said Manirakiza.

This year’s Innovation Week is being organized by the Ministry of Education, Science and Technology under the theme ‘Innovation for sustainable development’. Other stakeholders who are sponsoring the event are Vodacom Tanzania, UNESCO, D4D Hub, KOICA, Sweden Sverige, UNCDF, UNICEF and CRDB Bank Plc.

Digital Finance Expert from the UN Capital Development Fund (UNCDF) Paul Damocha, said that the agency has been focused on FinTech and Start-ups innovators in the agriculture sector.

According to him, the agency has been facilitating innovators with concessional loans, guarantees and other products that equip them in extending their technology to people at the grassroots.