(c) UNESCO, "The Fashion Sector in Africa: Trends, Challenges and Opportunities for Growth"
🏈🏆 In October, South Africa’s Springboks became rugby’s World Champions, again. They made history by being the first team to win the Rugby World Cup for the 4th time - and that’s a win for the entire continent.
🥊 Meanwhile in Riyadh, Cameroonian MMA star Francis Ngannou faced boxing legend Tyson Fury for an epic fight. Although Ngannou officially lost, he is the real winner - read why below.
In this new 50th 🤯 edition of HUSTLE & FLOW, you’ll also find more on:
👉 How Editi Effiong’s The Black Book became Netflix’s first African global hit.
👉 Why Mr Eazi, who just released his debut album “The Evil Genius”, is not your regular Afrobeats superstar.
👉 What we can learn from UNESCO ’s and ANKA ’s fresh off-the-press treasure-troves of data on the African Fashion and Crafts sectors.
👉 Why Sony launched a new fund to invest in African Entertainment.
As I sit at my desk writing this, I have major FOMO about missing the Lagos Art Season this year.
The pictures from the just concluded 2023 edition of Lagos Fashion Week are gorgeous. Congratulations to Omoyemi Akerele and team! Feast your eyes here.
Also, Art X Lagos is opening today. If you’re in town right now, head over Federal Palace to experience this new tour-de-force by Tokini Peterside-Schwebig & co.
↪️ If you enjoy HUSTLE & FLOW, don’t keep it to yourself. Subscribe and share!
FILM
🌟 Editi Effiong’s The Black Book, which premiered in September, has become “Nigeria’s first runaway Netflix hit”, according to Wired. Three weeks after its release, the movie had been watched more than 70 million times, even reaching number 1 in aspirational South Korea.
In the last edition of HUSTLE & FLOW, I talked about Editi’s innovative financing strategy. What I didn’t say is that Editi also took an enormous risk by spending $1 million on his passion project two years ago, at a time when neither Netflix nor any other buyer had ever spent that kind of money to acquire a Nigerian film.
🏅Thankfully, it all worked out for him, for his investors (Netflix reportedly spent $1.5 million on The Black Book) and ultimately, for Netflix. After a lackluster first few years, the platform may have finally hit gold - its first Nigerian crossover film.
“When [Netflix] started investing in its own slate of original content, Nollywood hoped that it would spur a creative boom, as well as a financial one, giving filmmakers the opportunity to explore new ground,” writes Wired. “But Netflix’s early titles were broadly similar to what came before them, in similar genres, albeit with slightly more elevated production values. And the money wasn’t great either. Reports have shown that Nigerian filmmakers are paid a lot less compared to their counterparts in countries with significantly smaller markets.”
The Black Book is a good illustration of what can happen when the right filmmaker is liberated from creative or budget shackles.
🤼 But it is also key to note that the competitive environment has evolved since Netflix’s early Nigeria days. Earlier this year, Amazon’s Prime Video entered the market with a splash, spending more than $1 million to secure the rights to Jade Osiberu’s Gangs of Lagos.
The Black Book and Gangs of Lagos share more than a few characteristics beyond their sticker price. Both films explore the Nigerian underworld and are ambitious in scope, ramping up their production value with numerous action scenes. But more importantly, they were made by creatively gifted and business-oriented producer-directors, who are only at the beginning of their careers.
In a few years, we might look back at 2023 as the year Nollywood turned a corner.
⛏ Still in Nigeria and also setting the stage for a grander future Nollywood, the groundbreaking ceremony for the $100 million Lagos Film City, which was presided over by Lagos State Governor Babajide Sanwo-Olu, also took place last month.
The project, which will be built on a 100-hectare plot of land in the Epe Local Government district's Ikosi-Ejinrin district, is structured as a Public Private Partnership and is being developed in collaboration with industry players Ebonylife Academy, Delyork, and Ogidi Studios.
🧐 The announcement was short on details but I’ll be keeping an eye on it and reporting back as more information emerges.
DIGITAL CONTENT DISTRIBUTION
Telco-owned African streaming services are struggling to compete with Netflix, Prime Video and Showmax, writes dámiláre dòsùnmú in Rest of World.
⚰️ The African market is a graveyard for mobile video apps: RIP Vodacom’s Video Play (2022), Telkom’s TelkomOne (relaunched as SABC+ in 2022), Econet’s Kwese TV (2019), Cell C’s Black (2019) and MTN’s Vu (2017).
💸 Indeed, scaling a video streaming business requires spending mountains of capital upfront and enduring significant losses for years - a business model that quickly looks unappealing to telcos used to making good money through voice, data, and mobile money services.
According to Iroko TV founder Jason Njoku, to grow a streaming platform “you need hundreds of millions of dollars and lots of patience. I don’t think I have seen a telco-first model work anywhere. The DNA of the company needs to be content. Live, breathe, and market it.”
🤝 So rather than “owning the entire pipe” as they once dreamed, telcos are going back to a model they’re a lot more comfortable with: working with specialized content partners to offer value-added services to their customers. Yes, the good ol’ call back ringtone or premium SMS model.
⭐️ One of the companies taking advantage of the situation is Starnews Mobile, a mobile video network that allows African creators and celebrities to monetize their content directly from their fans. (Disclaimer: I am an early investor in Starnews).
Despite the current VC funding winter, Starnews just raised a $3 million pre-series A led by Janngo Capital. Interestingly, other investors in the round also included football players Aurélien Tchouaméni of Real Madrid, Jules Koundé of Barcelona and Mike Maignan from AC Milan, all affiliated with athlete representation agency Excellence Sport Nation.
📈 Launched in 2017, Starnews Mobile works with more than 120 creators and boasts an active subscriber base of over 4 million through its partnerships with MTN and Orange across Cameroon, Nigeria, Ghana, Congo, Benin and Ivory Coast. Starnews CEO Guy Kamgaing said that the platform distributed $1 million to content creators last year.
Most of the content available on Starnews is organized into topical, hyper local channels, such as local celebrities lifestyle feeds, or channels on motorbike taxis in Cameroon or food recipes in Ivory Coast. For this type of content, YouTube or Instagram don’t provide real monetization options, while Starnews is able to leverage its telco partnerships to push these videos to the right audience and monetize through airtime micro-payments.
FASHION
🧥 UNESCO 's new report on the African Fashion sector is out and it's a must-read.
Entitled "The Fashion Sector in Africa: Trends, Challenges and Opportunities for Growth", the UNESCO study shows that the continent holds all the cards to become a global fashion leader.
A few key insights stuck out for me:
💰 The market value of clothing and footwear in sub-Saharan Africa was estimated at $31 billion in 2020 - but this includes foreign imports. In fact, Africa's textile, clothing, and footwear trade deficit stands at roughly US$7.6 billion. This represents a huge opportunity to redirect some of this consumption towards local brands, especially with the growing appetite on the continent for fashion Made-in-Africa.
🧑🏿🌾 Africa is a major producer of raw materials - 37 out of 54 countries produce cotton. However, while African cotton fiber accounted for 7.5% of global production in 2022, sub-Saharan countries exported more than 81% of their raw cotton rather than transforming and using it locally.
🏗The lack of industrialization and the resulting high production costs impede the growth of the African ready-to-wear segment, as many designers are forced to focus on a niche, luxury clientele who can afford their products. How to scale up production capacity is a major challenge for most of the small and medium-size enterprises that make up 90% of the Africa fashion sector.
🏭 A few countries (Egypt, Ethiopia, Lesotho, Madagascar, Mauritius, Morocco, and Tunisia) do have a significant manufacturing sector geared towards outsourcing for major global brands such as Guess, H&M, Levi’s, Mango, Zara, Chanel, Dior, and Hermès.
💃 Despite all these challenges, African haute couture is particularly vibrant, with 32 Fashion Weeks taking place annually across the continent and an increasing number of African brands being recognized internationally. A 42% increase in demand is expected in that segment over the next 10 years.
📝 The report also makes recommendations for decision-makers to tackle weak points of the ecosystem such as legal frameworks, skills and capacity building, investment, and environmental standards, in order to unleash the full potential of the African Fashion sector.
E-COMMERCE
📊 Another new great source of market insights is the white paper that was just released by sales platform Anka.
ANKA, which started out 7 years ago as Afrikrea, a marketplace for made-in-Africa fashion, design and crafts, has since transformed into an Africa “Paypal and Shopify” hybrid that helps aggregate shipping services to reduce costs. The company raised a $5 million extension round in September, and says it has more than 20,000 sellers in 100 countries (45 in Africa) -- providing it with scores of precious data points on how small African brands sell online.
A few elements stand out:
🤳🏿Social media (especially whatsapp, Facebook and Instagram) is the leading online sales channel for independent retailers - not dedicated e-commerce websites or apps.
🏬 In fact, social media accounts for 43.6% as the largest point of sale for retailers, while ‘physical shops’ are a distant second at 20.9%.
🇫🇷 France has Anka’s highest number of online shops with over 4,000, while Nigeria is second with 3,549.
🇳🇬 Nigeria has the highest seller average annual volume in the top 10 countries coming in at over $11,000 — more than three times the next country, Ghana.
💵 The average seller on Anka earns around $185/year.
Anka concludes:
“In our humble opinion, rather than pushing people to buy what they can’t, we should also empower them to sell what they do have, especially through export. Exporting is not a panacea but a real remedy for the many difficulties that African economies suffer from, such as trade deficits, currency instability and chronic unemployment.”
MUSIC
🔥 😈 After a decade of attention-grabbing singles and high-profile collaborations, global Afrobeats artist Mr Eazi has just released his own debut album entitled “The Evil Genius”.
🎧 Mr Eazi reached global stardom with his mixtapes and cross-genres hits featuring other big names, such as “Don’t Jealous Me” with Beyonce, Tekno and Yemi Alade, “Como Un Bebé,” with Bad Bunny and J Balvin, “Miss You Bad” with Burna Boy, or “Oh My Gawd” with Diplo from Major Lazer and Nicki Minaj.
🎨 But for all the music that he had made until now, Eazi had not yet produced his own album. This is now done. More than a music project (which features signature collabs with Angelique Kidjo or the Soweto Gospel Choir), the 16-track “The Evil Genius” takes Eazi’s taste for breaking boundaries further by matching each song with a specially commissioned work from a leading African visual artist.
Many things distinguish Eazi from the other Nigerian superstars (Davido, Burna Boy, Wizkid) whom he’s often bundled with.
🕵🏽 Here’s why I’ve been closely tracking Eazi’s moves for the past few years:
🎓 He graduated with a degree in mechanical engineering at the age of 19, and at just 32 years-old today, he already has a 13-year career behind him. He’s more than a fine boy no pimple.
😎 He’s an entrepreneur who then became a music star, not the other way around.
🔮 He opted to stay independent instead of signing with a major music label, trusting his ability to stir and develop his own career, but also recognizing early on the true value of the Afrobeats cultural movement. “I was like ‘Nah, this thing we’re holding is going to be big and it’s happening in our very own hands,’” he said.
🤝 He’s a master at cross-cultural partnerships. He is the creator of “Banku music”, a fusion of Nigerian Afrobeats and Ghanaian highlife. His collaboration with reggaeton superstar J Balvin won him a Latin Grammy earlier this year. His band ChopLife Soundsystem with Kenyan-born DJ Edu mixes South African amapiano influences with Afrobeats and Jamaican party culture.
💪 He supports emerging artists from across the continent - such as breakout star Joeboy - by providing mentorship and distribution through his emPawa Africa initiative.
💵 He is an astute investor and the founder of Zagadat Capital. His areas of interest include fintech, betting, and sports.
😇 Despite his own financial successes and his upcoming marriage into a billionaire family, you won’t see him chopping money on Hennessy.
🦆 Instead, he is a “duck”, according to DJ Edu. “You see a duck flowing, floating on water. Yet there’s a lot of stuff going on underneath the surface. That is exactly what he is.” Hard working with a smooth exterior.
SPORTS
🥊 💫 On October 28, Cameroonian Mixed Martial Arts star Francis Ngannou faced British Boxing champion Tyson Fury in an epic match in Riyadh, in front of a celebrity-studded audience which included Cristiano Ronaldo, Sadio Mane, Kanye West and Eminem.
🏆 Although Ngannou officially lost to Fury, for many observers the Cameroonian fighter is the ultimate winner. Why?
👉 Fury was granted the victory after a controversial split decision by the judges, despite the fact that Ngannou dominated the fight overall. It could have easily gone the other way.
👉 Ngannou went into the match as the clear underdog. Thirty-five-year-old Tyson Fury is a World Boxing Championship heavyweight champion on a 34-bout winning streak. In contrast, 37-year-old Ngannou, despite his status as former UFC heavyweight champion in Mixed Martial Arts, had never boxed professionally. The Cameroonian came into the challenge still recovering from an injury and his training camp - with Mike Tyson - only lasted 3.5 months.
👉 But more importantly, Ngannou used the highly publicized fight to quietly revolutionize the sports content market in Africa.
⭐️ ⭐️ ⭐️ "The Battle of the Baddest" was promoted as a premium Pay-Per-View event in the US, where fans could stream it live for $79.99 on ESPN+ PPV, and in the UK, where it was available for £21.95 through TNT Sports Box Office.
But that was leaving Ngannou's legions of African fans off the table.
💡 So Ngannou's teams at 3points0Labs, Gimik Fights and AMDM Africa came up with a solution to turn the Riyadh match into the first major Pay-Per-View sports event at affordable prices for Africa.
📲 By leveraging Africa's widespread mobile money services and some strategic partnerships, they made the fight accessible to African fans across the continent for just $3.99-$4.99 per view, and even as low as $0.80 for airtel customers. Awareness of the event was pushed through SMS marketing and collaborations with local social media influencers.
🌍 Although audience numbers are unknown at this point, it is easy to see how this type of approach could unlock massive revenue from the continent. Considering the 287 million mobile internet users in Sub-Saharan Africa, if 1% of those paid for the cheapest access package (airtel at $0.80), that would already represent close to $2.3 million.
And this doesn't include additional revenue such as booking fees (estimated at $50 million for Fury and $10 million for Ngannou) or sponsorship deals.
Ngannou, we see you 😎 🤑
CREATIVE INDUSTRIES FINANCING
🔥 African Entertainment is getting a new, high profile investor.
🇯🇵 Japanese behemoth Sony has announced the launch of a new $10 million fund to support the growth of entertainment businesses in Africa.
🎮 More specifically, this new Sony Innovation Fund: Africa will focus on early-stage startups in gaming, music, film and content distribution.
Through its other global funds, the tech and media giant's venture arm has made more than 100 investments in sectors like entertainment, robotics, AI, mobility, fintech, healthcare, logistics and SaaS.
💴 In Africa, SIF will take a more focused approach by targeting creative businesses only, starting with South Africa, Kenya, Nigeria and Ghana and ticket sizes ranging from $250,000 to $1 million.
It plans to not only invest in creative startups but also in infrastructure and even to build an animation school.
One thing that will differentiate Sony from other investors is that the Group also intends to leverage its expertise in areas such as film and music production, distribution and marketing, to facilitate the access of its future African portfolio companies to global markets.
🤝 SIF also enters the African market with the backing of IFC - International Finance Corporation (World Bank Group) which will provide financing, market expertise, and the ability to fund larger or follow-on rounds.
IFC itself is a new entrant in the small club of institutional investors in the African Creative space. (Disclaimer: IFC is one of my advisory clients).
🎯 In the last edition of HUSTLE & FLOW, I talked about how IFC, the largest development institution focused exclusively on the private sector in emerging markets, was now throwing its weight behind the African Creative Industries. In its 2022 fiscal year, IFC invested a record $32.8 billion across all sectors in developing countries, and now, the Creative Sector is in its bullseye.
Mid-October, IFC hosted the first Creative Industries event to ever take place during the World Bank-IMF general meetings in Morocco, an exclusive annual gathering of global world leaders.
🎤 I had the pleasure of moderating an insightful panel on private investment in the Creative Industries, during which panelists William Sonneborn (IFC), Moulaye TABOURÉ (ANKA), Antonio Avitabile (Sony Innovation Fund) and Laureen Kouassi-Olsson (Birimian Ventures) discussed the need for institutional investors to adapt their frameworks to better service this emerging sector.
💰 IFC took the opportunity of this panel to announce its ambition to invest $2 billion per year in the Creative Industries in emerging markets, both directly and through partnerships with other financial institutions and funds (such as Sony Innovation Fund). That is a substantial pile of cash.
Gone are the days where African creative entrepreneurs were shouting alone in the wilderness. Investors are now paying attention - time to step up the game.