Dear colleagues and friends,

The never-ending, traumatic month of March 2020 is finally over, and April is starting strong with an internet uproar over a live TV interview in which two prominent French doctors discussed testing a potential coronavirus vaccine in Africa “where there are no masks, no treatments, no resuscitation”, before making an unfortunate parallel that involved AIDS and prostitutes.

There’s been plenty of commentary on that episode already so I won’t add mine to the pile. Instead, I prefer to explore the less-obvious option which is that this crisis might turn out to have positive outcomes for the continent in the long run. Togolese economist Kako Nubukpo has written a great op-ed in Le Monde entitled “After coronavirus, another Africa is possible and it is not a utopia”, which I recommend you Google Translate if you don’t speak French. Islamic Development Bank’s Bandar M. H. Hajjar also wrote about how coronavirus could be an opportunity to reshape development in Africa.

When it comes to what interests us here on HUSTLE & FLOW, the move to all-digital is already having an impact on mobile payments, video streaming, e-commerce, home deliveries, content creation and gaming that will boost many businesses in the Entertainment space in the months and years to come. A new understanding of the urgency to industrialize will also eventually open new opportunities for the textile sector.

The painful, brutal transition will take a while though, so I am opening up this confidential newsletter and its archives to the general public for the duration of the confinement period. Anyone can now subscribe without the need for a referral and consult previous editions without a password. I encourage you to share these links with the creative entrepreneurs in your network who might be in need of support and inspiration in these unsettling times.

Happy reading to all,

Marie

GLOBAL RESCUE MEASURES

New rescue measures and support initiatives have kept pouring in, and the good people at Nairobi-based Maitri Capital have compiled a list of 70+ of Africa-focused funding opportunities here. The list includes most of the ones I had identified last week, as well as new ones such as impact investor Vital Capital’s new $10 million debt facility.

Large corporates have continued to announce sizeable contributions: South Africa’s Naspers committed R1,5 billion ($78,8M), MultiChoice Nigeria donated N250 million ($642,000) as well as N550 million ($1,4M) worth of inventory for public service announcements, mobile operator Orange added 3 million euros to its initial contribution of 5 million euros to help the countries where the company operates, and Facebook pledged $100 million in funding to news organizations with a focus on the hardest hit countries in the world. Also, NBCUniversal committed $150 million, and WarnerMedia and Sony $100 million each to support the entertainment industry - but this money won’t reach Africa unfortunately.

Locally, the governments of Botswana, Ivory Coast and Senegal, among others, have announced hundreds of millions of dollars in social relief funds. Kenya’s own emergency response fund’s initial allocation will come from monies received from government officials who committed to voluntary pay cuts, proving that miracles do happen, at least during the apocalypse. In Nigeria also, senators have surprisingly come through and will donate 50% of their salaries to the COVID-19 fight. It only took a global pandemic for some of Africa’s notoriously overpaid members of the political class to start behaving properly. On the same theme, Le Monde has a great article (in French) about the threat that coronavirus poses to the continent’s globalized elite, and especially to some of its older, most ineffective leaders - the kind who prefer to seek treatment abroad rather than invest in their countries’ health systems. The question is: could this lead to some “corona Spring” type of revolutions as the next elections roll around?

DATA CENTERS

In all this chaos, the surge in internet consumption continues to put a strain on the existing infrastructure globally. I’ve talked a couple times in this newsletter about the major opportunities that investors can find in the African data center space. For those of you who are interested in digging in, this new webinar on The African Data Centre Boom: A Regional Dissection is worth watching. The data center world is a complex, technical space with multiple moving parts. If, like me, you don’t know what a vendor neutral cloud operator does and why they currently have little competition, you can find out here.

MOBILE

In order to ease the financial burden on its now-confined population, Nigeria’s Minister of Communications and Digital Economy has ordered telcos (again) to reduce calls and data rates. He also announced that additional bulk spectrum would be allocated. According to the Nigeria Communications Commission (NCC), Nigeria has more than 174 million internet users, and its network is known for its unreliability. Now would be the time to push through some long-needed improvements.

Besides reducing data rates, telcos and financial companies across Africa have also reduced or waived mobile money transaction fees as governments have encouraged digital payments to reduce person-to-person contact and potentially slow the spread of the virus. Although East Africa is the world leader in mobile money adoption, in West Africa only one in four adults use these services, so COVID-19 could provide an opportunity to massively increase usage there. And once people get comfortable paying with their mobile phones for food or electricity, they’re only one step away from fully entering the digital economy.

Now is as good a time as any for Ethiopia to announce that it will allow non-financial institutions to offer mobile-money services, effectively opening up the lucrative business to telcos. Remember that a few weeks ago the country had already opened up two new mobile licenses, attracting the interest of MTN, Vodacom and Orange. Despite the economic armageddon that the corona crisis will likely leave in its wake in Africa, I believe that Ethiopia, with its 105 million population and still a greenfield in many regards, will continue to be an attractive destination for investors.

E-COMMERCE AND LOGISTICS

E-commerce and logistics startups across the continent continue to adapt their businesses to respond to the surge in demand for home deliveries. In Senegal, delivery startup Paps is offering to collect and deliver medical products and lowering prices for food and water deliveries. And because there are no online grocery stores in Senegal, Paps is currently working on integrating a catalog of food and hygiene products to its website, effectively launching its own e-commerce platform, which is an interesting development that could inspire other delivery companies. Nigerian e-logistics cargo startup Kobo360, which operates across Africa, is limiting movement of non-essential items such as cement and construction materials to focus on food products, which account for more than 50% of the platform’s clients, and pharmaceuticals, which make up around 4%. And with perfect timing, Rwandan startup Kasha, an e-commerce platform improving women’s access to health, hygiene and self-care products, has secured a $1 million investment from Finnfund to expand further across Africa.

But perhaps the biggest e-commerce news of the week has been the announcement by Rocket internet that it had sold its 11% stake in Jumia. Apparently the sale took place before the onset of the corona crisis and it now feels strangely counter-cyclical. Although the platform has had a rough year since its listing on the New York Stock Exchange last April, with admissions of numbers tampering, mounting losses and some very public downsizing, if there was ever a moment where it could reverse the tide, it is now. I will be grabbing the popcorn to watch how this one unfolds.

FASHION

Many of the world’s fashion designers and brands have had to halt everyday operations due to the coronavirus pandemic, and several have been reallocating resources to the fight against COVID-19. In the fledgling African fashion sector, resources are limited, but one thing almost anyone can do is make masks, and make masks they do in Nigeria, Kenya, Ghana, and really, everywhere. Local designers are quick to say that they know fabric masks do not protect against the virus but that they can help in limiting the spread of the wearer’s own droplets and in reminding people not to touch their face. Journalists love this kind of stories and they are nice indeed, but the real opportunity for Africa’s fashion sector lies in preparing for the post corona world, one in which governments will be newly motivated to produce medical gowns and all sorts of uniforms locally.  

VISUAL ARTS

Sotheby’s sixth sale of Modern & Contemporary African Art took place last week, in a new online-only format. It featured over 100 works from 58 artists across 21 countries and realised $2,881,741 in sales. If the amount is modest, the stats are interesting: the auction saw a 46% increase in the number of bidders from last year’s sale, and 27% of buyers purchased lots for the first time at Sotheby’s. Participants hailed from 22 countries and almost 30% of bidders were under 40 years old. 

MUSIC

Meanwhile, African artists have joined in on the “making music on the internet” trend (what else is there to do?). YouTube hosted the second weekend of its #Stay Home... #WithMe" online African music festival with performers like M.anifest, Simi and Manu WorldStar. The first edition had hosted live stream performances from several South African, Nigerian and Ghanaian artists including Reekado Banks, Gigi Lamayne, and Asa. In Francophone Africa, Vivendi’s Universal Music Africa (UMA) launched Digital Live Play, a “live concert in an empty room” concept at the Majestic Cinéma in Abidjan, which was broadcast live on the local Orange TV channel. Vivendi is planning to organize 8 more of these concerts across several other countries, particularly in Benin and Cameroon, where the group recently opened CanalOlympia venues.

SPORTS 

The world of sports was in mourning last week after the death of former Marseille football club president Pape Diouf from coronavirus. The 68-year-old was being treated in a hospital in Senegal, the country of his birth, after contracting the virus.

In other bad news, the cancellation of all live sports events is already having consequences in terms of sports broadcast rights. Canal+ was the first to refuse to pay for the remainder of its Ligue 1 rights bill while matches are paused, claiming a fall in advertising revenue. BeIN Sports swiftly followed suit and announced it would suspend payments for Ligue 1 and Ligue 2 rights until the competitions resume. 

Global sports rights had already been in decline after reaching a peak a few years ago, and according to VC Matthew Ball, the COVID-19 crisis is now increasing the need for leagues and broadcasters to invest in alternative monetization models, such as gamified viewership and web-based gambling, especially since it will take time before fans are allowed back into stadiums. There’s been some quick thinking there already: on March 22nd, Formula 1 launched a new F1 Esports Virtual Grand Prix series, featuring a number of current F1 drivers but played on the official F1 2019 PC video game, and the NBA just announced the “NBA 2K Players Tournament”, opposing 16 current NBA players in a single-elimination, player-only tournament on Xbox One. The NBA and ESPN are also reportedly in discussions to create a H-O-R-S-E (shooting game) competition among several high-profile players in isolation. I haven’t yet gotten round to discussing Africans’ appetite for sports betting, a market which totaled nearly $40 billion combined in Nigeria, Kenya, and South Africa in 2018, but this medium article from blockchain startup Kamari does a good job at it. It feels like there might be a major opportunity there.

BROADCAST

The rest of Matthew Ball’s essay is a must read as it goes deep into the various ways in which the corona crisis is reshaping the Pay TV and OTT video space. Although his analysis primarily concerns the US and Europe, some of the trends he unearths could at least partially apply to Africa as well, such as Pay TV’s dangerous reliance on the aforementioned live sports rights, traditional broadcasters’ vulnerability to the current stagflation-like phenomenon of declining advertising revenue despite increased viewership, and the rise of aVOD (advertising video on demand).

In fact, African broadcasters must already be feeling the strain of having to offer more value for less money, with advertising revenue bound to fall with the cancellation of live sports events and the looming recession. Meanwhile, the Communications Authority Of Kenya (CA) has ordered pay-TV providers to grant access to the free-to-air channels on their decoders, and Nigeria’s National Broadcasting Commission (NBC) has called on all pay-TV subscription broadcasters in Nigeria such as DStv, StartTimes, GOTv, and FreeTv to immediately decrypt all the local channels on their bouquets. 

DIGITAL CONTENT

The CcHub has announced the name of the 8 companies that have been selected so far as part of its partnership with the Africa CDC and GIZ to provide funding support to innovative communication-related COVID-19 related projects that are focused on the delivery of vetted information in various African languages. The winners will be supported with grants of up to $5,000 to propagate the reach of their projects - a small amount for sure, but one that could still provide a much-needed boost to some digital creators.

VOD

An emerging trend is the potentially COVID-inspired renewed interest for the VOD space in Africa, after the initial wave of excitement (in which I was very much an active participant with Buni.tv) ended with the failures of many early entrants facing underdeveloped infrastructure. In the last edition of HUSTLE & FLOW I mentioned the launch of MGM’s VOD service in South Africa. Last week, two local platforms launched in Kenya: Africa 24’s factual storytelling platform and Savvystream, a free, ad-supported video streaming service by Dotsavvy. Although these solutions were of course developed pre-COVID, they could benefit from the on-going shift to all-digital and the temporarily lower mobile data rates. I’ve always thought the aVOD model would be a good one for Africa, but back in my day (2012! That’s what I call being too early) the African digital ads inventory was too small for this to work. The market may be ready now, although brands will themselves be impacted by the economic crisis and will tighten their advertising belts.

And finally, YouTube, already the leading online video site on the continent, is planning to release Shorts, a rival to hugely popular video-sharing app TikTok, by the end of the year. I’ve already talked about how well-suited TikTok is to the African market, and there is probably space for a competitor, especially if it’s YouTube (or Facebook).