WIDU.africa online platform: Promoting direct investment in Africa

Project description

Title: Promoting employment in the informal sector in Africa by leveraging diaspora money transfers (WIDU platform)
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Ghana, Cameroon, Kenya, Ethiopia, Togo
Overall term: 2019 to 2021

Context

In African countries, it is challenging for entrepreneurs in the informal economy to establish or grow a business: they often have insufficient capital and rarely receive loans. At the same time, taking advantage of learning and training opportunities is difficult. Without access to these opportunities, African entrepreneurs are often unable to reach their full potential. Yet realistic employment prospects are key to development and stability across the different regions of Africa.

According to estimates by the World Bank, African migrants in Germany send around EUR 1.5 billion to family, friends and acquaintances in their home countries. The recipients primarily use this money to meet their day-to-day needs. Only in a few cases are the remittances used for entrepreneurial purposes, despite the fact that this is a great opportunity to sustainably improve economic conditions in Africa.

This is where WIDU.africa comes in: the project offers grants to create a financial incentive to divert existing flows of money from private individuals within the African diaspora in Germany, Austria, Switzerland and France into long-term investments in the micro businesses of relatives or friends.

Objective

The employment and income situation of start-ups as well as small and micro businesses in Africa (Ethiopia, Cameroon, Ghana, Kenya and Togo) is improved.

Approach

WIDU.africa is a regional project funded by the Federal Ministry for Economic Cooperation and Development (BMZ) and implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. It was launched in Ghana and Cameroon in 2019.

The central tool for the project is the online platform WIDU.africa. The platform allows members of the African diaspora in Germany, Austria, France and Switzerland, together with friends and relatives living in participating African countries, to apply for funding for their business ideas. The focus is on small and micro businesses in the informal economy. The prerequisite is that the project partners already know and trust each other. They also have to be prepared to invest their own funds in the local business. In addition to financial support, sponsored entrepreneurs receive three free coaching sessions customised to their individual needs.

The online platform was developed in partnership with the agency Lucid.berlin – with the involvement of the African diaspora and various fintech companies. All of the project support is handled via the platform: from registration and identification, project description, provision of documentation, approval and monitoring.

Results

Since the platform was launched in November 2019, about 9,000 sponsors and entrepreneurs have registered with WIDU.africa. Over 1,300 projects were approved and are now being implemented. Diaspora investments totalling EUR two million have been promised.

In spring 2020, the project implemented coronavirus measures in order to mitigate the effects of the economic crisis on micro businesses. Participating businesses receive an additional grant of EUR 250. WIDU.africa introduced the Corona Business Grant at the same time: businesses receive up to EUR 2,500 as well as business coaching if they use innovative means to mitigate the effects of the coronavirus pandemic. A total of 410 Corona Business Grants have been approved to date.

As at: March 2021