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Crowdfunding on the rise in the Mediterranean


The rise of crowdfunding in the southern Mediterranean countries could help solve the financing difficulties of young companies. The association Financement participatif en Méditerranée is trying to promote it.



(from left to right) Thaneur Hemdane and André Jaunay, the two co-presidents of Financement participatif en Méditerranée, want to strengthen crowdfunding in the Mediterranean (photo: F.Dubessy)
(from left to right) Thaneur Hemdane and André Jaunay, the two co-presidents of Financement participatif en Méditerranée, want to strengthen crowdfunding in the Mediterranean (photo: F.Dubessy)
MEDITERRANEAN. "We must have a regional vision on crowdfunding. In essence, participatory financing is borderless." Thameur Hemdane, co-president with André Jaunay of Financement participatif en Méditerranée (FPM), is campaigning for the development of this new form of investment in the Mediterranean and Africa.

Founded in 2014 with the support of the French Ministry of Foreign Affairs, the FPM association has organised several events in France, Morocco and Tunisia. Financed by its members, the Provence-Alpes-Côte d'Azur region (on projects) and the French Development Agency (AFD), it wants to democratise access to entrepreneurship in the southern Mediterranean through crowdfunding, and more particularly on its private equity part. The directors of FPM avoid using the name in French (financement participatif) to avoid confusion in Muslim countries where this term refers to Islamic finance.

Gathered in Marseille on Friday 16 June 2017 at the Villa Méditerranée, a dozen experts and regulators from both sides of the Mediterranean were able to compare their analyses on the theme of "launching an international dynamic to remove regulatory barriers to crowdfunding in African and Mediterranean countries". For the organisers, FPM, Anima Investment Network and Conect Tunisia, the first step is to adapt the regulatory frameworks to crowdfunding.

"Regulators are facing structural questions on the optimal framework to put in place. The ideal legislation does not exist. The construction is permanent as this field remains very evolving. It must be collective and open", explains Thameur Hemdane. In France, the association is working with the government and the regulator AMF (Autorité des Marchés Financiers). And it all starts with education.
 

Better targeting of holdings
The two partners hope that some of the money invested by the diaspora in the country of origin will come to crowdfunding platforms. In February 2017, the Diafrikinvest programme was officially launched in Marseille. Financed by the European Union and coordinated by Anima Investment Network, it includes a "crowdfunding platform that will target investors from the various diasporas", as Emmanuel Noutary, Anima's general delegate, recalled at the end of the seminar.

In particular, crowdfunding allows young business creators to move faster by benefiting from fresh money that is more complicated to obtain via the traditional channels of the banking system. Its advantages also affect investors who have difficulty identifying projects. They can - thanks to the crowdfunding platforms that select the files and advise the company directors - better target their investments. All the more so as the pooling of financing among several contributors limits the risks.
 

A financing method adapted to the South of the Mediterranean

"Morocco, Tunisia, Lebanon, Egypt and Israel are the most advanced Mediterranean countries in this field in the South of the Mediterranean", indicates Thameur Hemdane. While specifying that "the amounts raised remain very disparate. Without counting Israel far ahead, Lebanon, like Egypt, have, thanks to crowdfunding, enabled companies to raise €900,000 each in 2015 (latest available figure). Morocco follows with €400,000 and Tunisia with €200,000.
These figures should be compared with the weight of participatory financing in private equity in the Old Continent, estimated at €5.3 billion, 50% of which was raised in the UK.  "In Europe, this amount increases by 100% every year. The southern countries are starting from a long way off, yet this type of financing is very well adapted to this region. It should not be a reason for a further gap with the northern shore," emphasises Thameur Hemdane. For the co-president of FPM, "political will is essential" in its development in the southern Mediterranean. "In Tunisia and Morocco, draft laws are being prepared. Egypt is discussing regulations and Lebanon has had legislation in place for two years," says André Jaunay.

The World Bank estimates the potential of crowdfunding at $7 billion by 2025 in the Mena/Africa region. This compares with around $4 billion at present. The amounts at stake are therefore still very significant.

Read also the recommendations of Emmanuel Noutary, General Delegate of Anima Investment Network, to develop crowdfunding in the Mediterranean.

 

Frédéric Dubessy


Monday, June 19th 2017



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