Initial coin offering (ICO) is the new model of fundraising that has been gaining traction in the funding environment.
Limited access to finance is one of the major reasons why startups in Africa fail in their early stage. Getting capital for a new project plays a crucial role in the early stage of development. Startup in this part of the world struggles to get capital. For example, many of these startups have to pass through many intermediaries, to get funds. In many cases, their applications get rejected.
Earlier this week BTC.ng had the opportunity to interview Lucky Uwakwe Co-Founder Cheetah Africa and COO Blockchain Solutions on the topic of ICO and how this new form of fundraising can be relevant to startups in Africa.
Lucky Uwakwe is an investor, strategic advisor and one of the respected figures in the cryptocurrency community in Nigeria, A blockchain expert and certified cryptocurrency specialist, He has being a speaker in blockchain conferences and financial institution including CBN within and across Africa which put him in a great position to talk about this trending topic.
Are ICOs Relevant in Africa?
“ Africa still need funding for it business, we need exposure to a more global participation, ICO is one of the innovative funding structure that gives small startup the opportunity to raise fund from a global pool, where small startup get almost equal opportunity to funds like bigger established company in other parts of the world.”
ICO Regulations in Africa
ICO is still unregulated in many African countries, the rise of this new way of raising fund has attracted the attention of regulators and financial institution. Many of them are still skeptical about it and have warned investors, citing ICO pose a ‘big risk’ due to its lack of regulations, showing concern on money laundering and fraud. According to Lucky, lack of regulation in cryptocurrency space is a drawback for ICO to thrive in Africa.
“I know some blockchain project started by Africa, yet they have to register their business in Malta, Estonia, and Switzerland because of their existing regulatory framework. This service charge and tax return are paid to Maltese government and its economy is improved. The lack of existing regulations is also affecting other Blockchain related company to set up their business in Africa, however, I will commend some countries in Africa that have been proactive in seeing that their country become a friendly destination to tech startups like Mauritius and Rwanda”
Do you think ICOs Should Be Regulated In Africa
African countries to should set up a committee and appoint heads to chair them, with intention to set up a unit in their various relevant ministries like finance and technology ministry, with a sole aim of allowing sandbox to thrive and implement these technologies in area that is most suitable, But as I said in my last panel oversea at ASEAN summit in Thailand, no one regulations fit all, in terms of ICO and Blockchain, FinTech, IoT and A.I, some country will have to modify these laws to suit their economy, no country should kill or stifle the space because of the disruptive nature of the technology, rather sandbox approach should be taken. I have traveled across many regions in Africa and seen how they are embracing blockchain, cryptocurrency and ICO, it has not been encouraging. Though there is light at the end of the tunnel, considering how few people like us have taken the responsibility upon ourselves to study the technology in postgraduate level at global recognized institutions. Africa should regulate ICO activities in Africa to protect her investors and stakeholder and founder so as to curb market abuse, further enhance and solidify Africa reputation as blockchain friendly jurisdiction.
For questions regarding this discussion, you can to tweet to Lucky Uwakwe @Luo2027