Crowdfunding for Youth Entrepreneurship in Tanzania

Project summary

The literature highlights some of the limitations of traditional debt financing as a response to the youth entrepreneurs’ financing needs. Funding becomes a matter of friends and family, and local dealers all represent a limited and expensive means of obtaining funds for their entrepreneurial ventures. Recently, new alternative and innovative approaches to financing entrepreneurs and start-ups emerged.

The project ’crowdfunding for youth entrepreneurs in Tanzania’ (C4YET) seeks to generate an understanding of crowdfunding as an effective funding mechanism for (youth) entrepreneurs. To fill this knowledge gap and to build capacity on crowdfunding in the context of Tanzania, C4YET project employs state-of-the-art research methodologies. In the exploratory research phase, C4YET project will careful review existing literature relevant to both funder behaviors and biases and youth entrepreneurship in developing countries. In the mature phase, an extensive data collection will be carried in situ to understand local crowdfunding behaviors.

C4YET will seek to influence policy and strategies concerning crowd funding, including models applicable in developing countries. Specifically, in Tanzania, it will seek to recommend policy on crowd funding to stakeholders such as the Ministry of youth, Ministry of Industry, Trade and Investment and financial policy regulators such as the Capital Markets and Securities Authority (CMSA) and Bank of Tanzania.

Outputs

Midterm report
Three doctoral students have completed their data analysis and are at different stages of writing the final drafts of their theses. They have also prepared drafts of papers and submitted them for publication. Notably, one of the Ph.D. students has received the news of her paper being accepted for publication.

Collaborative efforts have been undertaken by CBS, Mzumbe University, and SIDO in implementing activities. The first activity, a pilot field experiment took place in Arusha from January 16th to 26th, 2023. The second activity, a randomized field experiment was conducted in Dar es Salaam, Tanga, and Moshi from June 15th to 23rd, 2023. These activities were conducted as part of the project with the following objectives:

Objective #1: To investigate the behaviors and biases of crowdfunders in the context of large distances and cultural differences.

Objective #3: To determine the crowdfunding models that are most suitable for the needs of youth entrepreneurs in Tanzania.

Objective #4: To understand which strategies (such as features, communications, project sizes and characteristics, and presentation styles) are most effective for youth entrepreneurs in maximizing the benefits from crowdfunding.

Objective #6: To enhance the research capacity of the participating researchers.

The project aims to strengthen the research capabilities of the involved researchers through these joint activities.