HUSTLE & FLOW #7: African Entertainment goes all-digital: mobile payments, live streamed concerts, online art auctions, sports gaming, and more

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).

HUSTLE & FLOW #6: Organizing the resistance to COVID-19, a roundup of rescue initiatives for African entrepreneurs

Dear colleagues and friends,

Last week saw the coronavirus-related deaths of two popular figures of the African media space: the iconic Cameroonian Afro-jazz legend Manu Dibango, who passed away at 86 in a French hospital, and 30-year-old Zimbabwean star TV journalist Zororo Makamba. Prevention measures also took a violent turn in Kenya, South Africa, and other parts of the continent as countries called on the police to impose lockdowns and curfews.

But despite the grim news, bright spots also emerged in the African fight against the virus, as wealthy individuals, startups, and governments came together to organize the resistance. Perhaps the most high profile example of this new kind of collaboration is the major donation of essential medical supplies by Chinese billionaire Jack Ma, founder of Alibaba, and the dispatch of these items free of charge throughout Africa by Ethiopian airlines.

In this edition of HUSTLE & FLOW, we will do a roundup to date of these rescue initiatives, especially those that can be leveraged by the Entertainment sector to limit the economic impact of the crisis. I don’t believe there’s any other comprehensive resource on this topic, so don’t hesitate to share this email with your network, and especially with the entrepreneurs in your portfolio if you are an investor.

We’ll also continue to look at how entrepreneurs can best protect their businesses and prepare themselves for a future that will offer different kinds of opportunities. Already, experts and commentators point to the urgency now for African countries to invest in their own value-added industries and supply chains. Not a new idea of course, but one that might finally have come of age as the continent realizes that it cannot count on China or anyone else for its strategic needs.

I always love to hear from you, so continue to email me your comments, questions, mailing list referrals and Zoom meeting requests at marie@restless.global. And remember that you can always visit www.restless.global/hustleflow (pw: hardouthereforapimp) to access previous editions of this newsletter. 

Happy reading to all,


Marie

 

GLOBAL RESCUE MEASURES

In the past few days, global finance and development aid institutions have gotten into formation to provide generous packages to help African countries deal with the impact of the COVID-19 pandemic. The World Bank and the International Monetary Fund have called on all official bilateral creditors to suspend debt payments from qualifying countries. Afreximbank has announced a $3-billion facility, named Pandemic Trade Impact Mitigation Facility (PATIMFA), while the African Development Bank (AfDB) also raised $3 billion through a record-breaking “Fight COVID-19” Social Bond. The United States will be providing $274 million in emergency health and humanitarian assistance to the most at-risk countries, including 19 in Africa. France has also hinted at a future economic rescue package for Africa. Regionally, the Central Bank of West African States has pledged FCFA 450 billion (about 700 million euros) to help the 8 countries of the West African Economic and Monetary Union (WAEMU / UEMOA in French). 

In Nigeria, in an unprecedented move the government and the country’s powerful private sector have come together to devise a concerted response to the crisis. President Buhari approved a total of N15 billion ($40 million) in financing for health initiatives, while Tony Elumelu’s United Bank for Africa (UBA) announced a donation of N5 billion ($13 million) and several wealthy members of the private sector contributed N1 billion ($2.7 million) each. The Central Bank of Nigeria, on behalf of the Bankers’ Committee and in partnership with the private sector led by Aliko Dangote Foundation and Access Bank, have come together to form the Nigerian Private Sector Coalition Against COVID-19. The Lagos State government has also partnered with Guaranty Trust Bank (GTB) to set up a new 110-bed isolation and treatment centre at the Mobolaji Johnson Arena (formerly Onikan Stadium). 

In South Africa, the country’ wealthiest families, the Motsepes, the Ruperts and the Oppenheimers have each pledged R1 billion ($57 million) to assist the government’s efforts, as well as small businesses and their employees affected by the coronavirus pandemic. And in Zimbabwe, billionaire Strive Masiyiwa is offering protective clothing, cash, life and health insurance and transport for nurses and doctors for the country’s health-care workers.

The above initiatives mostly seek to address the health emergency first. When it comes to support to the private sector, South Africa has announced various measures including a temporary Employee Relief Scheme, tax reductions, and cash or loan support for businesses worth a total of R3.5 billion ($200 million). Kenya followed suit with a raft of tax reductions, Ksh10 billion ($95 million) in cash transfers to the elderly, orphans and people living with disabilities, and the fast tracking of various payments to improve liquidity in the economy. Last night, Nigerian President Buhari announced a 3-months moratorium on various government-backed loans, including on loans from the Bank of Industry (BOI) that includes those to the creative industries.

More business support measures are likely to be on their way across the continent, and I will do my best to keep track of them here. Globally, over $14.5 billion in COVID-19 capital relief is newly available for entrepreneurs, as compiled by Duke University’s CASE program. However this great tool needs to be updated with African resources as they become available. Regarding the creative industries, Germany has put other countries to shame with its staggering $50 billion dedicated aid package. In Africa, support to the sector can only come from international developmental organizations, which will probably come out with their own schemes. In Kenya for example, creative industries financier HEVA Fund is asking creative practitioners to fill in a survey on the impact of the crisis on their business in order to inform future support measures.


INTERNET AND MOBILE

Meanwhile, everyone is hanging out on the internet. According to a report by First Figures, COVID-19 has already led to a 70% increase in internet use, and 12% in streaming globally, especially in China and Italy. In Africa, operators continue to cut prices to encourage usage, such as Orange Cameroon which reduced prices to its services and products and waved Orange Money charges last week, and South African data provider Rain, which accelerated the launch of its unlimited 4G data offering at R479 ($27.3) per month. In Kenya, Airtel is offering free internet access to the Longhorn e-learning site to allow students to continue studying despite the school closures.


TECH

The African tech community has reacted fast to the #COVID19InnovationChallenge call for solutions, especially in Nigeria where VC fund Ventures Platform pledged both financial and structural support to tech founders, developers, and enthusiasts who can use their skills to develop technologies that can help the government in the fight against COVID-19. Lifebank, a health startup that finds and delivers blood to patients has created a national register to track hospitals with working ventilators and respirators - it has only found 100 devices so far. Booking platform Hotels.ng has partnered with hotels to create isolation centers across the country. Genomics research startup 54gene has launched a $500,000 fund to boost local testing capacity for coronavirus. 

And as mentioned last week, the funding initiatives from innovation incubator CcHub and investment fund EquaLife Capital are still ongoing.

Going further than the immediate focus on health, technologist Moses Kemibaro provides an interesting point of view from Kenya, which I like to call “a country of early adopters”, on how the Corona-tech boom will impact local lifestyles. In particular, he notes the churches’ forced move to live streaming, the strengthening of the already hot on-demand logistics sector, and the growth of Direct 2 Consumer digital businesses. I see these trends as potentially very beneficial to the African Entertainment sector in the long term as the health emergency is forcing investment in distribution networks (both digital and physical through on-demand delivery) that were cruelly lacking, but also the adoption of new behaviors.


E-COMMERCE

Talking about new behaviors, e-commerce is already seeing a revenue boost worldwide, which experts say could represent an added $175 billion (5% increase) in 2020. In South Africa, according to investor Manuel Koser from Silvertree Holdings, online health shop Faithful to Nature has seen order volumes double in the last two weeks, PetHeaven has seen a huge increase in sales, and UCOOK has had record order volume on cook-at-home meal kits. Meanwhile, leading pan-African platform Jumia has announced that it will donate certified face masks to health ministries in Kenya, Ivory Coast, Morocco, Nigeria and Uganda, drawing on its supply networks outside Africa. The company has also offered African governments use of its last-mile delivery network for distribution of supplies to healthcare facilities and workers, and will reduce fees on its JumiaPay finance product to encourage digital payments over cash. As I said last week, this crisis is a big opportunity for African e-commerce platforms to establish themselves as an essential service in the mind of thousands, if not millions, of new customers.


BROADCAST

Also driven by increased demand from people stuck at home, many of them with children, broadcasters across the continent continue to adapt their offering. Francophone pay TV operator Canal+ has made its channels accessible for free across Africa until April 30th. Forced to pivot by the cancellation of all live sporting events, MultiChoice’s SuperSport will convert its normal line-up to thematic channels for the foreseeable future, showing sports documentaries and other sports-related content. It will also feature a Viewers’ Choice block where viewers’ social media suggestions on their favorite sporting moments will determine the content. Radio programming is also impacted: the various stations owned by the Kenyan Broadcasting Corporation (KBC) will start broadcasting school programs from Monday to Friday. I am making a bet here that African broadcasters are realizing the dearth of quality local kids and educational programming and will start investing more in this type of content in a post-corona world.

Following the lead of Netflix and the BBC, MultiChoice has announced a series of measures to support out-of-work media staff. The Pay TV leader has set aside R80 million ($4.5 million) to ensure that current productions are able to pay full salaries of cast, crew, and creatives for the months of March and April, and will guarantee the incomes of freelancers on its SuperSport productions. Considering that MultiChoice is the single largest producer of content in Africa, this should shield a considerable number of industry practitioners from immediate disaster. Through the MultiChoice Talent Factory, Multichoice’s new online learning portal will also support over 40,000 members of the industry to gain access to courses and online masterclasses during the confinement period.


MUSIC

Leading streaming platform Spotify has announced that it will match up to $10 million in donations to organizations supporting artists in need through its COVID-19 Music Relief project. Quite a few African artists make money through Spotify and might be eligible to access these funds. Spotify is also working to add a new feature to its Spotify for Artists platform that will enable artists to fundraise directly from fans, waiving its revenue share from Music talent marketplace SoundBetter, and offering extended free trials for educators on its audio recording platform Soundtrap.


FASHION

Vogue editor Anna Wintour and designer Tom Ford have launched a Coronavirus Relief Fund for those in the American fashion community who have been impacted by the COVID-19 pandemic. In Africa, the African Development Bank has established itself as the leader in the fashion space through its Fashionomics program, but Afreximbank, the British Council and others have also traditionally been quite active. We can hope that these institutions are currently at work on a dedicated rescue initiative for the fashion industry.

According to The Africa Report, in east Africa, where hundreds of millions of dollars have been invested in the garment industry, hundreds of thousands of people stand to lose their jobs as US and European orders for African garments have dried up. A coordinated response could include wages subsidies for workers, a subsidized training package to retain manufacturing capabilities, and a retooling of garment factories to produce garments for medical needs. The Kenyan government has already reached out to the fashion and textile sector to assess its capacity to make face masks and other protective gear.


VOD

South Africans are getting more options to watch premium content online. Amazon has announced it is making its kids content including series and movies available for free on its global streaming service, including in South Africa. MGM will also be launching its new sVOD (subscription on-demand) service for the South African market, which will be available as a standalone Micro Pass subscription and also be part of Vodacom’s Video Play Premium service. The offering will take advantage of MGM’s large film and TV catalogue including TV series like The Pink Panther, The Handmaid’s Tale, Teen Wolf, Stargate SG-1, and movies like The Hobbit and Legally Blonde. 


MOBILE VIDEO

Continuing our exploration of mobile video models adapted to Africa, here’s one that is screaming for a Nigerian adaptation: Snoop Dogg-backed app Cameo is having a moment, as its revenue surged 30% last week, and orders are up 83% since the beginning of March. Founded in 2017, the venture, which has raised more than $65 million, lets anyone remotely famous essentially sell virtual autographs. Cameo currently features 30,000-plus (mostly B-List) celebrities, who set a price for a personalized video they send out, with Cameo taking a 25% cut of each. Nigeria’s fame-obsessed society seems like fertile ground for such a service, but I can see it working in several other countries as well. Something to chew on if your tech/video/music business has suddenly ground to a halt.


ANIMATION

The Hollywood Reporter has a fascinating article on how the US animation industry has adapted to remote working without missing a beat, with series like Fox’s The Simpsons and Bob's Burgers, Netflix's Hoops, Apple's Central Park, and Warner Bros.’s Animaniacs, and Gremlins: Secrets of the Mogwai still in production and pumping out new episodes on schedule. 

I hope this can inspire African animators, who are already used to learning and working at home, to persevere in their craft. To finish on a hopeful note, it’s also worth noting that in January, Cartoon Network Africa’s Shesha Fest, which showcased several shorts wholly produced in Africa such as Garbage Boy & Trashcan, Majitu and Intergalactic Ice Cream, outperformed some of Cartoon Network and Boomerang’s favorite shows in the same month. Nine months from now, on top of a baby boom and a divorce boom, will we see an animated content boom?

HUSTLE & FLOW #5: Special Surviving Corona edition, mining the crisis for opportunities

Dear colleagues and friends,

Writing each new edition of HUSTLE & FLOW these days feels like sending dispatches from a vastly different world every week as the ground continues to shift underneath our feet.

Last week, several countries in Africa started implementing confinement measures as reported cases rose above 1,000. But it’s easier said than done in places such as Lagos where local culture, behaviors, and the powerful influence of religion go against the very idea of social distancing.

In addition to the human toll, the global economy is now facing a particularly cold winter - one that is likely to last 18 months, according to London’s Imperial College. Many African countries will be triply hit by the combination of the general slowdown, local currency devaluations, and capital drying up as international investors turn away from the continent to worry about problems at home.

However, as we all know, in every crisis lie opportunities. For example, content consumption - for news, communication, education and entertainment - is at a peak right now. In fact, for millions of people trapped in their homes around the world, digital content is the only escape. For investors, the expected currency devaluations, especially when it comes to entertainment market leader Nigeria, will make certain deals particularly affordable.

In this special edition of HUSTLE & FLOW, I will take a pragmatic approach and focus on what we CAN do as entrepreneurs and investors in the African Entertainment space to protect our businesses and prepare for the future, even though we can only guess at what this future will look like. African markets will react differently than developed ones to this crisis. Also, African entrepreneurs will not be able to rely on the same generous rescue packages that many western governments have started implementing. They can only count on themselves, their creativity and resilience (and perhaps on the support of a few international partners). 

Before we get into this, an apology: the link I gave you last week for the HUSTLE & FLOW archives was incorrect. The right one is https://restless.global/hustleflow, and the password remains hardouthereforapimp. 

Continue to send me comments and questions, as well as subscription requests, at marie@restless.global. Also, if you are an entrepreneur or investor in need of strategic advice in these uncertain times, hit me up and I will give you a free 30 min session. We will work together to find some solutions for your business.

Happy reading to all,

Marie

INTERNET AND MOBILE INFRASTRUCTURE

Crises have the advantage to clarify what truly matters, and we can give Coronavirus credit for settling the debate on whether the internet should be considered a utility or a luxury. As millions of people shifted to WFH (work from home) over the past couple weeks, networks quickly started showing signs of saturation, prompting YouTube, Netflix, Amazon Prime and others to reduce streaming quality in Europe to prevent the internet from breaking. 

In Africa, which is still far from universal internet coverage, network saturation is an everyday occurrence even in non-Corona times. Safaricom was the first African operator to react last week by announcing it would double its home fiber speeds to encourage WFH. It also waived M-Pesa fees, and was promptly followed in this by competitor Airtel Kenya. MTN South Africa has announced that it will cut data prices for its 30-day bundles by up to 50% starting from mid-April and offer each of its subscribers 20MB of free data daily. Zimbabwe’s TelOne announced a discounted Home Intense Package to encourage its subscribers to “effectively work and learn from home”. It will be interesting to see what the impact of these Corona packages will be on consumer behavior.

In any case and as we’ve already discussed in this newsletter, increasing coverage and capacity through investments in high speed cables, data centers, and mobile infrastructure (including 5G) is a great bet on the future, no matter what shape it takes. Just a few days ago, pan-African internet service provider Liquid Telecom announced that it had secured a $4.8 million deal to manage Togo’s Carrier Hotel data center as well as the country’s primary internet exchange point. Opportunities are out there.

E-COMMERCE

The impact of Coronavirus on e-commerce worldwide has been two-fold: although platforms face supply chain disruptions, they also report a 50% increase in online sales as people avoid physical stores. Will Coronavirus force similar behavioral changes in Africa and contribute to a wider, faster adoption of e-commerce on the continent? I believe that the logistical challenges are still too important for us to see a global, long-lasting shift, except in the most advanced markets such as Tunisia, where sales on Founa.com, the country’s leading online store, have quadrupled in the past couple weeks. Nevertheless, it is definitely an opportunity for African e-commerce platforms to create market awareness and present themselves to new consumers as providing an essential service. This is what Jumia is doing through its partnership with global health product manufacturer Reckitt Benckiser to provide access to hygienic products.

FASHION AND CONSUMER PRODUCTS MANUFACTURING

Several producers of consumer goods worldwide have retooled their operations to shift to the production of essential items such as hand sanitizers, ventilators, or face masks. For African manufacturers who have the capacity to do so, this can be an opportunity to access new regional and international markets. I am thinking specifically of the fashion and textile industry in Ethiopia and West Africa.

But there might be other, longer-term opportunities besides face masks. One of the major Corona-trends that experts believe is here to stay is the mass adoption of remote working (with this new term, Work From Home) in developed markets, even if it is not a silver bullet. Africa might take longer to transition to this new way of working as stable internet and power supply at home remain a challenge. But it can certainly service the world. As someone who’s been working remotely since 2006 (and been a full-fledged digital nomad since 2015), allow me to share a personal insight: I see the need for a proper WFH apparel line that would be comfortable like pajamas but presentable like office wear, at least on top, for Zoom calls. Such a clothing line could be produced in Africa and sold globally. If you want to work together on this, let me know!

TECH

Talking about Zoom, here’s an example of a business that is uniquely suited to these strange times we’re living in. One of its great features is the ability to change the background of your video. Any solution that can contribute to improving the professional quality and ease of video calls, including in low bandwidth environments, would be worthwhile for African startups to explore.

Another big opportunity for startups: Africa’s largest innovation incubator CcHub is offering between $5,000 and $100,000 in funding to companies with COVID-19 related projects covering last-mile communication, help for people affected by the disease, production of essential medical supplies and support for disrupted food supply-chains.

And last but not least, EquaLife Capital is launching a $20M Africa Venture Debt Relief Fund that will support venture businesses starting with a preliminary focus on the East African region with loans between $200k and $2M. This is big and this is very needed, and I hope EquaLife can inspire other funds and especially DFIs to repurpose some of the vast amount of capital raised in 2019 to support other sectors of the economy across Africa.

PHYSICAL VENUES: EVENTS, SPORTS, CINEMAS, CONCERTS, RESTAURANTS

Of course, the hardest hit sectors are those which involve the physical presence of people in public spaces. As confinement measures and travel bans are rolled out across the world, cultural events have been cancelled and venues shut down. Festivals, galeries, museums and conferences are going virtual to avoid going dark completely. Hollywood studios, starting with NBC Universal, are giving up on theatrical windows after the closing of cinema chains to release new films directly online. World-class artists are streaming private concerts from their homes, and restaurants move to delivery only (will this be the comeback of Travis Kalanick?). But of course, this is not the same, especially in Africa where the communal experience is paramount.

Filming has also stopped in most markets (but not yet in South Africa) and on-going productions have been shut down, causing major disruption and job losses and spurring Netflix to launch a $100 million relief fund for out-of-work creatives (AGAIN: thank you Netflix) which we hope will also cover stalled projects in South Africa and Nigeria.

The first step to take for all these businesses unfortunately is to cut costs down quickly and dramatically, move as much of their activities online as possible, and attempt to renegotiate loan repayment schedules if they have any. But that’s far from enough. So, as George Clooney would say, what else?

CONTENT

As they stare a global recession in the face, African entertainment companies will have to rethink and reshape their strategic investments to survive. Although they will have to save money by divesting from some assets, they should also invest to preserve their future competitiveness. According to Nielsen, video consumption could soar as much as 60% in coming months. Broadcasters and streamers have already started to adjust their programming to match a viewing landscape dramatically different than even just one week ago. In Africa, StarTimes has opened up free access to more than 100 local and international channels on its streaming app, StarTimes ON, while MultiChoice is making several of its 24-hour news channels freely available to stream on DStv Now in South Africa. For now, news is getting most of the attention, but soon broadcasters will also have used up their backlog of original scripted content and they will need more, and more of different types of content. 

Studios and development executives are still looking for great IP, even if investment decisions may be delayed. Now is the time for African companies to invest in the content development and IP creation side of their business, through activities that are well suited to individuals or teams working remotely, so that they can be ready with solid projects when production can start again. Writing, of course, necessitates very little resources and can take many shapes and forms: news articles or blog posts, long form fiction or nonfiction, books, plays and screenplays, comics, or stand up comedy sets. Audio content can also be cheap to create: podcasts, audio book recordings, radio plays, music and songs of course. Animation and video games can still be produced by teams working remotely. And finally, even with the shutting down of film and TV sets, new video content can still be created by repurposing archive footage, finishing projects left on the back-burner, or filming short comedy or educational content at home with a smartphone and a laptop. In fact, after being bombarded this week by ads for online yoga and HITT classes, I find myself wondering why there aren’t any truly sleek African dance workout videos? Sherry Silver seems too busy to corner the space herself so it’s up for the taking.

And to finish this week, a special shout out to African creators doing their part by offering their educational content for free: Ubongo Kids, Bino & Fino, BRCK, and Nollywood’s highest grossing director and animation studio owner Niyi Akinmolayan who created an “understanding coronavirus” video in Yoruba, Igbo, Pidgin, Hausa and Effik versions after noticing that non-English speakers in Nigeria didn’t have access to this crucial information.

HUSTLE & FLOW #4: Global lockdown, MultiChoice challenges, TikTok Africa strategy, and more

Dear colleagues and friends,

As many countries around the world get into full lockdown mode, African reactions to the crisis are running the gamut from the perplexingly laid-back to the aggressively proactive: In Nigeria, fashion prevails, while Senegal draws praise for its partnership with the UK to develop a hand-held test kit, and Kenya shuts down schools and air travel after only 3 identified cases.

The situation is evolving rapidly, and it’s now clear that things will get worse before they get better. In any case, as long as there is still some activity in the African Entertainment space, HUSTLE & FLOW will continue. This week we have a little bit of everything, but we’ll dig deeper into challenges and opportunities in the Broadcast space.

Thanks to your referrals, the audience of this newsletter has already grown by 50% as it celebrates its first month. As always, to get added to the mailing list for HUSTLE & FLOW, share feedback, comments or questions, just drop me a line at marie@restless.global.

A note to the newcomers: First of all, welcome! Now, if you’re suddenly finding yourself with extra time on your hands and want to catch up on previous editions of HUSTLE & FLOW, they are now available at www.restless.global/hustleflow (pw: hardouthereforapimp).

Happy reading to all,

Marie

FASHION

Senegalese ready-to-wear fashion label Tongoro, founded in 2016 by Sarah Diouf, is named one of Fast Company’s most innovative companies for 2020. Tongoro shot to prominence after Beyonce wore its designs in her music video for “Spirit”, the first single of her Lion King: The Gift album (a phenomenon in itself and the continuation of the Black Panther, well, spirit). Sarah Diouf has proven herself to be a very savvy entrepreneur and marketer, and she is clearly someone to back.

MUSIC

Afrobeats superstar Burna Boy is having a great year. After his 2020 Grammy nomination for Best World Music Album (which he lost to Angelique Kidjo), he recently distinguished himself as he first Nigerian artist to sell out a total of 15,500 tickets in the French cities of Paris, Lyon and Marseille. An impressive performance which, once again, speaks to the power and influence of Nigerian artists on the global scene, no matter the language.

It’s no surprise then that YouTube is now finally rolling out YouTube Music and YouTube Premium in Nigeria, with plans to launch in Kenya at a later date. The service was previously only available in South Africa. Both YouTube Premium and YouTube Music deliver an ad-free experience which enables downloads for offline streaming and access to YouTube original shows. Downloads have become a must-have feature for content platforms in Africa as it has proven to be an efficient way to bypass issues such as high data costs and slow internet (people use free wifi at the office or in public places to download and then watch later). Netflix implemented it back in 2016.

SPORTS

The Kenyan government has imposed a one-month travel ban on Kenyan athletes due to coronavirus. One might wonder where they would have gone though, as most international sporting events have been postponed or cancelled, leading some to ponder what a world without sports would look like. 

Still in Kenya, Quartz has a nice article about Enda, the country’s first performance athletic shoe company which was launched in 2016 but struggled to convince investors that Kenya could become an important manufacturing hub. Today its products are still partly made in China, although the goal is eventually to bring all production to Kenya. The idea of an athletic shoe and brand developed with the world’s top runners certainly appeals to me from a marketing point of view, and manufacturing in Ethiopia could be a good alternative. 

BROADCAST

Still on the topic of sports, pay TV giant MultiChoice, which built its continental dominance through a historic monopoly over sports broadcast rights, is getting seriously challenged on that point by governments in both South Africa (through the Independent Communications Authority of South Africa - ICASA) and Nigeria (through its National Broadcasting Commission). In 2018, MultiChoice made a case before ICASA against the breakdown of its sports monopoly, arguing that “the notion of "premium" content as "must have" is well understood to be obsolete”. Its presentation gives a fascinating insight into MultiChoice’s approach to its business, but quite a lot has changed in the past two years (Kwese has folded, Zuku is a shell of itself) so please don’t rely on this document for specific data.

The breakdown of sports rights monopolies may be bad news for MultiChoice, but regulating entities see it as a way to create more opportunities for local broadcasters. In Nigeria, the measure is part of a set of reforms to the broadcast sector that NBC started to implement this week. The reforms also include a new quota of 70% local productions, and various new regulations on online content, hate speech, and the issuing of licenses. Considering that practitioners of the Nigerian Broadcast industry already complain that their sector is over-regulated, will these new measures be a step in the right direction or will they just create a bigger mess? Time will tell. Otherwise, I actually believe that the Nigerian Free-To-Air market is currently underperforming, underinvested and undervalued and that it presents opportunities for experienced investors. More on this in next week’s HUSTLE & FLOW.

In addition to the sports rights issue, MultiChoice is also dealing with growing competition from Netflix and other platforms, and is speeding up its transition to streaming. Last week, MultiChoice made all its DStv channels available online to all subscribers for 3 days in an effort to drive the uptake of its DStv Now service (normally only available to premium subscribers). It was also a capacity test for its servers before it introduces a new, streaming version of its linear DStv service. 

According to a recent report by Digital TV Research, Pay TV will continue its growth in Africa with subscriber numbers set to increase from 30.7 million today to 47.26 million by 2025. However, revenue growth will be more muted as intense competition between major players MultiChoice, StarTimes and Canal+ but also OTT platforms drive prices and ARPUs down. I think Pay TV is a very, very difficult space. Many new players have failed over the past 15 years, with the exception of StarTimes which succeeded by driving prices to the ground. But that strategy can only work once and my feeling is that there is no more space for new entrants. 

FILM & TV

While country after country was going on lockdown this past weekend, Nollywood stars were strutting the red carpet at the Africa Magic Viewers Choice Awards (the African Emmys) in Lagos, which made for major eye candy. The AMVCAs, owned by the unavoidable MultiChoice, are Africa’s most glamorous Film & TV awards gala. I was lucky to win Best TV Series there back in 2013 with The XYZ Show, and that first trip to Lagos inspired my team and I to launch Ogas At The Top there a year later.

VIDEO ON DEMAND

Meanwhile, Netflix’s Africa expansion continues. The platform has signed a development deal with British-Nigerian actor John Boyega’s U.K.-based outfit UpperRoom to produce non-English language films from West and East Africa. UpperRoom’s Netflix slate already includes three features, two from Nigeria and one from Egypt, with the company to develop more projects based on African IP such as literary properties, remakes of Nollywood classics, plays and mythology. I can’t help but notice that Netflix’s first deals for Nigerian original content went to two filmmakers from the diaspora (Akin Omotoso has lived and worked in South Africa for many years). It also took Netflix a while to find these first projects. I believe this is due to the lack of development process and skills in Nigeria, which leads most producers to pitch their projects before they are ready. That’s one clear area in which investment in time and resources would pay off.

MOBILE VIDEO

And finally, to wrap up this edition of HUSTLE & FLOW, a follow up to last week’s conversation about mobile video models for Africa: Chinese short video/social media app TikTok has been investing quietly into African creators and influencers as part of a concerted strategy to gain a major foothold on the continent. Here’s a product that’s a perfect fit for Africa: from the app’s all-inclusive features, to its focus on dance challenges, its courting of local talents, and its partnerships with brands like Transsion’s Infinix, ByteDance (owner of TikTok) is getting a lot of things right.

EVENTS

Nope.

HUSTLE & FLOW #3: Data centers investment, telco growth strategies, mobile video for the mass market, and more

Dear colleagues and friends,

As international events such as the Africa CEO Forum, the Basketball Africa League kick off, MIP TV or SXSW get cancelled, companies ban all non-essential travel, and stores run out of toilet paper, it seems like the long-dreaded zombie apocalypse may be upon us. (One shouldn’t let a good disaster go to waste though - time to play the market). 

In Africa, if fake news is spreading much faster than the virus, stumbling oil prices resulting from lower Chinese and global demand are beginning to spell doom for oil-producers Nigeria and Angola. In any case, the show must go on, so welcome to the 3rd edition of HUSTLE & FLOW.

This week we are going to get a bit technical as we take a closer look at opportunities in data centers, telecommunications and mobile video. 

I've enjoyed chatting about African Entertainment in person with several of you last week in Los Angeles. Interest for African talents and stories is rising in Hollywood, and hopefully some of the exciting collaborations I’m hearing about will come to fruition soon. In the meantime, please keep your great comments, questions and referrals coming by emailing me at marie@restless.global.

Happy reading to all,

Marie

INVESTMENT NEWS

Emerging markets PE firm Actis has acquired a majority stake in Rack Centre, Nigeria’s leading provider of data center colocation and cloud services. Rack Centre hosts the Internet Exchange Point of Nigeria and has the largest installed capacity in West Africa servicing over 35 carriers, Internet Service Providers, and Mobile Network Operators. This news follows the recent announcements of Berkshire Partners’ acquisition of South Africa’s Teraco, the Africa launches of cloud data centers by Microsoft Azure and Amazon Web Services, and European data center giant Interxion's move into East Africa.

The development of local hosting capacity is a key ingredient of the growth of digital entertainment in Africa. At the moment most content consumed by African internet users is still hosted abroad, leading to long lag times and high costs. As the continent carries on its digital transition and demand for hosting capacity rises, data center trading is shaping up to be one of the largest investment trends in the coming years. If you have a few million (or dozen million) lying around, you might want to get in on this.

ARCHITECTURE

Nigerien architect Mariam Kamara, founder of Atelier Masomi, is set to begin construction on her sustainably-designed arts center in Niamey this summer. Like her previous projects in the city, the building will be built using compressed earth bricks.

And while we’re on the topic, here are more great examples of African architecture to feast your eyes on.

VISUAL ARTS

The new Yemisi Shyllon Museum, which opened last October in Lekki, Nigeria, would be a worthy addition to the above list. The museum is named after Prince Yemisi Shyllon, one of Nigeria’s biggest art collectors, who financed the construction of the building and its future maintenance to the tune of $1.7 million. 

BROADCAST

Multichoice’s VOD service Showmax has announced that more than 50% of its catalogue is now local content. Although Showmax is available across Africa, its investments in original content have so far been limited to South Africa.

Chinese pay-TV broadcaster StarTimes has added ESPN to its linear offering, making the sports channel available across Africa for the first time since a carriage dispute ended its deal with MultiChoice in 2013. Since then, fans in sub-Saharan Africa had been watching ESPN content on the ESPN Player subscription OTT service. The deal between Disney (which owns ESPN) and StarTimes was no doubt motivated by ESPN’s acquisition of the Africa broadcast rights for the NBA, which include rights for the new Basketball Africa League (BAL). 

SPORTS

Five-time boxing world champion Floyd Mayweather has announced its intention to expand its Money Team franchise in Africa, starting with South Africa, Nigeria, Kenya and Egypt. The Money Team offers specialized boxing programming based on Mayweather’s own training regimens, as well as virtual reality and personal training. The TMT franchise currently operates 44 outlets across the United States. 

The health and fitness sector has been growing alongside the westernization of urban lifestyles across Africa, with gyms, spas and healthy food options popping up everywhere. I believe there is an opportunity here for entrepreneurs who will manage to create strong, fun, scalable regional brands.

TELECOMMUNICATIONS

Telcos are Africa’s overlords. They run the continent and own the customers. Any business with a digital component will sooner or later have to deal with them. That is why it is crucial to understand the main forces at play in the African telco space.

A flurry of recent activity is giving us some interesting insights. Ethiopia is set to open the bidding process for the awarding of two telecoms licenses which have attracted the interest of Orange SA, MTN Group, Safaricom, Econet Global and Etisalat. In Angola, US-backed group Africell Holdings found itself the only bidder for the country’s fourth licence to run infrastructure-based mobile, internet, fixed telephony and pay-TV services. Meanwhile, South Africa’s Telkom is preparing to auction off some real estate assets to finance the modernization of its network while loss-making Cell C is considering acquisition offers; and Zimbabwe’s struggling state-owned telco NetOne has failed to attract an investor to take over its majority shareholding.

Although a couple “fresh” markets (such as Ethiopia) may remain, what we are witnessing overall is the maturation of the $60 billion Sub-Saharan African mobile market, which is now facing the same headwinds that have hit operators around the globe: saturated markets, evolving consumer preferences, slower subscriber growth and falling ARPUs (average revenue per user). Bain & Company sees two strategies for African telcos to survive this next phase: either focus on becoming a world-class network operator (as quality of service is still an issue on the continent), or choose to own the customer rather than the network by developing innovative lifestyle platforms that include content streaming, financial services, gaming, but also e-commerce or logistics. Kenya’s Safaricom is a proponent of this second strategy. Both approaches mean lots of opportunities for companies that can work with the telcos to achieve their goals.

MOBILE VIDEO

That takes us in a roundabout way to an interesting question I received last week from a HUSTLE & FLOW reader about Quibi, Jeffrey Katzenberg’s highly anticipated short form content start-up, and whether its model could be relevant for Africa. First of all, let’s stop a minute to acknowledge Katzenberg’s and CEO Meg Whitman’s tremendous fundraising abilities, as Quibi just added $750 million to its war chest ahead of its April 6 launch, after an initial round of $1 BILLION. Other than that, I must admit that I am a Quibi skeptic. Do we (or even Millennials) really need “one more thing to do with our phones instead of ever being bored”? In any case, it is not a solution built for the African market: too expensive, too premium, too heavy. Quibi’s most innovative feature is its proprietary Turnstyle technology, which allows users to switch seamlessly between landscape and portrait, actually bringing up different points of view on the same story. But Turnstyle videos use 20% more data than standard mobile videos - and that simple fact would make the service dead on arrival in Africa, where the price of data is already the biggest hurdle to the mass adoption of mobile video.

To expand on what I said last week, the opportunities I see in mobile video in Africa are for hyper-local, cheap content (such as local celebrities lifestyle, music videos, soaps or comedy in vernacular languages) distributed to the mass market through partnerships with telcos pursuing the “innovators” strategy described above. This is not actually anything new: in recent years all telcos have launched their own mobile music or video stores, with some turning out to be quite successful (MTN Music+/MusicTime!, MTN Comedy+) while others have bombed. Indeed, the transition from “dumb pipe” to content platform is anything but easy (just ask AT&T how its merger with Warner Media is going), that’s why none of the telco-owned services has managed to scale past a few countries and why none of them has expanded into original content yet. I believe that the bottom-of-the-pyramid mobile video market is still up for the taking and that a (well-funded) start-up with strong telco links has a better chance at this than any in-house service the telcos can come up with. 

Of course, the higher segments of the market will go to Netflix, which is already on track to adapt its offer to local specs. After implementing payments in local currency for South Africa, Nigeria and Kenya, it is now considering expanding the lower-priced, mobile-only option it piloted in India to Africa.

EVENTS

The events below may or may not happen. Who knows anymore!

FIHA, Abidjan, March 23-25

ARES Fighting Championship, Brussels, April 3rd

Cannes Film Festival, Cannes, May 12-23

Africa-France Summit on Sustainable Cities, Bordeaux, June 4th-6th

HUSTLE & FLOW #2: Netflix takes Africa, tourism deals in Ivory Coast, the "historical breakthrough of African fashion", and more

Dear colleagues and friends,

First of all, thanks to those of you who wrote back with words of encouragement after the first edition of HUSTLE & FLOW. Your enthusiastic feedback strongly validates the need for more actionable, business-focused information on the African Entertainment space, so here we go with episode 2: 

The big news this week is Netflix’s one-two punch entry into Africa, with the official launch of Netflix Nigeria, and the release of South Africa-made “Queen Sono”, the platform’s first African original series. Netflix’s intent for Africa is bold and ambitious -- I’ll talk more about what this means for African content and for the VOD space below.

Another topic that is top of mind right now is how the coronavirus pandemic will affect Africa. At the time of writing, only 3 official cases had been reported on the continent (in Algeria, Egypt and Nigeria) and Kenya had suspended all flights from China. China is an important player and investor in the African tech and media space (through companies such as Huawei or StarTimes). Besides concerns over African countries’ preparedness to handle the virus, the longer term issue is how the current Chinese lockdown will impact African economies (Spoiler alert: it’s not looking good, but also temporary and nothing we haven’t seen before). 

Do continue to refer more people to this newsletter as you’ve been doing this past week. For the moment I am keeping HUSTLE & FLOW confidential so I haven’t activated a subscription link. To be added to the list just drop me a quick line directly at marie@restless.global.

And finally, please don’t hesitate to send me questions or topics that you’d like to see covered in future editions of HUSTLE & FLOW, as well as suggestions for improvement.

Happy reading to all,

Marie

INVESTMENT NEWS

International football star Didier Drogba recently concluded a roadshow that has helped his birthplace, Côte d’Ivoire, collect MOUs for a total of $15 billion in commitments to back a variety of tourism projects, including hotels, exhibition centers, waterparks, seafronts, resorts, tourist routes, retail centers and eco-tourism developments. Tourism is Ivory Coast’s third economic pillar after agriculture and energy, and the country forecasts 4 million tourists arrivals (up from 2 million today) bringing in more than $1.5 billion by 2025. Many other countries in Africa could benefit from similarly aggressive tourism development strategies.

BROADCAST

Ivorian public broadcaster RTI has launched its new television channel, RTI 3, dedicated to young fans of sports and music. RTI 3 will be available on the Canal+ and StarTimes bundles as well as on DTT (Digital Terrestrial Television / TNT en francais). 

Africa’s on-going (and fraught) transition to DTT has been one area of strong interest for global operators such as StarTimes, DSTV, Canal+, but also the very French M6, which acquired a 33% stake in Ivorian channel Life TV in 2017. However, the initial excitement of some investors over Africa’s DTT potential was based on the flawed assumption that more spectrum = more cheap channels = more content = more viewers = more revenue. That equation was false because it forgot to take into account the fact that in most African countries the pool of TV advertisers is still very small. So in reality what we’re seeing is simply more channels that end up competing over the same advertising budgets from a limited number of brands. My view is that investing in DTT is necessary and interesting for existing operators but very risky for new entrants. More on the (very complex) topic of Broadcast and what can be done in the space in Africa in future editions of HUSTLE & FLOW.

FASHION

Last week I mentioned the buzz created by Cameroonian designer Imane Ayissi at Paris Haute Couture Fashion Week. Well, turns out there were not one, but three African designers hogging the spotlight on the Parisian catwalk this year, as Ayissi was followed by Austrian-Nigerian 2019 LVMH Prize finalist Kenneth Ize and South African 2019 LVMH Prize winner Thebe Magugu, whose separate collections also garnered rave reviews. While Le Monde talks about “the historical breakthrough of African Fashion”, we might very well be witnessing the birth of the next global fashion brands. 

VISUAL ARTS

Not to be outdone, the Visual Arts also shone last week as collectors flocked to the 1-54 Art Fair in Marrakesh. While some fear foreign speculators will snap up major works cheaply leading to a masterwork exodus out of Africa, others point to the growing number of African collectors and their private museums. In any case, contemporary African art is becoming both an asset class in itself, and a new sector in need of structure and expertise. 

SPORTS

Here is a lovely profile of Sarah Chan, the Sudanese-born Africa talent scout for the Toronto Raptors, which would make a great film or TV series. I’m too busy to snap it up for myself so I’m offering it to you here :-)

I have Mark Kaigwa to thank for the link - and actually I highly recommend Mark’s awesome newsletter The Letter N and his company Nendo if you’re interested in smart African social media trends and analysis.

FILM & TV

Before we get to the big chunky piece of G.O.A.T. meat that is Netflix, let’s acknowledge the good performance of African filmmakers at the recently concluded festivals in Sundance (“Farewell Amor”, “Softie”, “Cuties”, “This is not a burial, it’s a resurrection”) and Berlin (several films including “This is My Desire”, the first Nigerian film to be selected). These are all talents to track.

Now on to our main story. Netflix began its careful exploration of the African market a few years ago, starting with a few acquisitions in South Africa and Nigeria. Last year, it announced the commission of its first 2 original South African TV series, and went on a buying spree in Nigeria, snatching up basically all the top Nollywood titles (it also acquired “Lionheart” before its release to brand it its first Nigerian original film). The success of these films on the platform, and especially of “King of Boys” and “Moms at War”, emboldened the streamer to push forward. Last week, Netflix Nigeria officially launched with a clever Twitter campaign and a star-studded event attended by Ted Sarandos himself, during which its first Nigerian original TV project, a 6-part sci fi series by Akin Omotoso, was revealed. Just a few days later, Netflix’s first ever African original TV series, the South African-produced “Queen Sono”, premiered on the platform. I binged-watched it of course.

Why is this a big deal? Netflix has solid plans for Africa, and this is only the beginning. Their presence and their approach in Nigeria specifically will lead to an increase in content quality (more than in quantity as Nollywood already produces prodigious amounts of content), and in demand for professional studio space, equipment, crew, and development expertise. It will also educate the global market about Nigerian content, and de-risk investment in the country’s film industry for other international players. So, thanks Netflix.

VOD

A question I often get asked is: is there still anything to do in the VOD space in Africa? Well, the short answer is no. The battle over streaming in Africa is over before it even started and Netflix has won (I don’t trust Digital TV Research numbers but the order of magnitude feels correct).

I know some people have a hard time believing this as it’s still early for African VOD. Yes, eventually the other global platforms will make their way to the continent as well. As the only deep-pocketed local player, Showmax might survive for a while, limping and sickly, but I’m not even sure about that. I also have great respect for Jason Njoku and what he has achieved with Iroko. His wife Mary Njoku, Founder and CEO of ROK Studios, which sold to Canal+ last year, is responsible for one of the very few exits of the sector. Jason has announced his plans to take Iroko public in 2021, but I do not see this happening neither do I see another path forward, especially now that Netflix is stepping up its Naija game. 

Here’s the thing: When it comes to Netflix’s play in Africa, it is not even about the money they’re bringing or the kind of deals they’re doing. For an industry and a continent that has struggled to be seen and appreciated for, truly, hundreds of years, the fact that a prestigious global brand now says “We’ve seen you, we’ve noticed your talent, we appreciate your stories and the way you tell them” is extremely powerful and will buy Netflix decades of goodwill (just like it did for Black Panther’s Ryan Coogler). And with this, they can go anywhere they want. 

A caveat though to my earlier statement: I do see opportunities in online video for local players or new entrants targeting the mass market with simple, basic, gamified, mobile-only solutions. Stay tuned for more in future editions of HUSTLE & FLOW.

EVENTS

FIHA, the premier hotel investment conference in Francophone Africa will take place at the Sofitel Abidjan Hotel Ivoire on March 23-25.

And finally, there are some concerns that the following events might get cancelled or postponed for corona-reasons, but at the moment they’re still happening:

MiP TV, Cannes, March 30th-April 1st

ARES Fighting Championship, Brussels, April 3rd

Africa-France Summit on Sustainable Cities, Bordeaux, June 4th-6th

HUSTLE & FLOW: a Newsletter about Investing in African Entertainment

Dear colleagues and friends,

I’m excited to launch HUSTLE & FLOW, my newsletter about business and investment opportunities in the African Entertainment sector. 

Why HUSTLE & FLOW? Well, partly as an homage to the iconic 2005 Sundance Audience Award winning film directed by Craig Brewer and produced by John Singleton. The press junket with star Terrence Howard for the release of the film was one of my very first interviews as a budding 23-year-old journalist at CNN in New York (he said he liked my outfit - I kept the tape). 

But HUSTLE & FLOW is also a reference to the entrepreneur’s hustle and the investor’s deal flow in the Entertainment sector, which are the core of what this newsletter will be about. Here I will be using the term Entertainment to encompass what is often referred to as the Cultural and Creative Industries (film, TV, animation, video games, music, fashion, visual arts, architecture and publishing), but also Sports and Hospitality, as all these sectors are related and intertwined, and present numerous synergies. 

The global Creative Industry generates $2.25 trillion annually (more than global telecommunications), is a major provider of jobs (30 million globally), and is particularly resilient to economic downturns, while the global Sports market in itself is set to reach $614 billion in 2022. But despite Africa’s undeniable wealth of raw talents, these sectors are very much under-funded and under-developed on the continent. That is the textbook definition of an untapped opportunity. 

For most traditional investors however, Entertainment is also a new, mysterious and slightly esoteric field which they perceive as very risky (“Artists don’t know how to run a business”, “There is no way to predict if a film is going to be successful or not”, “Piracy sucks out all the profit from content production”, “All football clubs lose money”, “Africans don’t have enough disposable income to spend on non-essential items”).

And yet they may have also noticed that every bar, club or festival they go to from Los Angeles to Tokyo now plays Afrobeats, that Zimbabwean-American “Walking Dead” star Danai Gurira just signed a juicy overall deal with ABC Studios, that Cameroonian designer Imane Ayissi was the talk of the latest Paris Fashion Week, or that Nigerian fighters squarely dominate the UFC.

What does this all mean? And really, where is the money? I have survived 15 years of being 15 years too early as a creative entrepreneur in Africa, during which I have launched several companies, closed down a few, advised many, and successfully exited one. These experiences have taught me what works, and what doesn’t.

In the meantime, the world has also changed and very crucially, entertainment consumption has gone truly global thanks to the explosion of content, social media and e-commerce platforms such as Netflix, Amazon, Spotify, YouTube, Facebook, Instagram or ESPN that are now connecting African talents to the world. That is a true game changer and the reason why you should be paying attention.

In this newsletter I will attempt to demystify the African Entertainment space and help you identify investment opportunities by sharing news, trends and key figures, as well as calls for projects and relevant events. Although I will link to existing articles or reports, I will also include exclusive market insights that I typically do not share widely or publicly. 

If you are receiving this email it is because our recent interactions have made me think that you might have an interest in these topics. If you know of anyone in your network who would benefit from some HUSTLE & FLOW, please have them email me. And if you would like to stop receiving these emails, just let me know ;-)

I am looking forward to your feedback, comments and questions as I work through the kinks of this new format.

Happy reading to all,

Marie 

INVESTMENT NEWS

Afreximbank makes a statement with the launch of a $500M fund to support the production and trade of African cultural and creative products over the next two years. The funds will be accessible as lines of credit to banks, direct financing to operators and as guarantees. The fund’s first investment is a $190-million facility to Kojo Annan’s Made In Africa Inc. (MIA) for the acquisition of Vlisco, the leading producer of African wax fabric whose Dutch ownership had been a source of controversy in Africa. An interesting move which can be seen as re-appropriating cultural appropriation.

Emerging Capital Partners acquires Burger King South Africa from Grand Parade. ECP, the investment firm that’s been quite successful at developing the Java and Artcaffe franchises in Kenya, believes that it can bring growth where GPI has failed.

Et ici en français dans le texte pour encore plus de details.

South African Pay TV operator Multichoice launches its Innovation Fund to invest in South African black-owned SMEs in the Video Entertainment and Technology space.

FILM

“Americanah” author Chimamanda Adichie hosted Kenyan Hollywood actress Lupita Nyong’o last weekend at Mo Abudu’s new EbonyLife Place in Lagos at a diner attended by heavyweights of the Nigerian Creative sector. Nyong’o is producing and starring in the TV series adaptation of “Americanah” for HBO which is set to start shooting soon.

FilmOne Entertainment, the leading Nigerian distributor and production company, has gone into production on the first movie of the $1 million film fund it launched with China’s Huahua Media and South Africa’s Empire Entertainment in December. FilmOne plans to eventually finance 8-10 films as part of this first slate.

The poster for 'Namaste Wahala', the Nollywood Meets Bollywood crossover movie which promises exciting images of an over-the-top Nigerian-Indian wedding, goes viral on social media. Let’s see if the film can live up to the hype when it comes out in Nigerian theaters on April 24th.

Grammy-award winning director Melina Matsoukas and British-Ugandan 'Get Out' star Daniel Kaluuya hit the red carpets of Lagos and Johannesburg for the release of their film ‘Queen & Slim’. This might look like your normal promotional tour except that it is not: US studios typically don’t bother sending their stars to promote the African releases of their films as these markets are considered insignificant. But in the past couple of years several Black Hollywood stars such as John Boyega or David Oyelowo (and Lupita Nyong’o - see above) have made the trip, pointing (just like the “Americanah” project) to growing links between Hollywood and Nollywood.

If this feels like a lot of Nollywood news it’s because A LOT is going on. I am very bullish (as you may already know) about the Nigerian film industry. I’ll have more opportunities to explain why in future editions of HUSTLE & FLOW. 

VISUAL ARTS

British-Nigerian artist Yinka Shonibare is building project spaces and artists residencies in Lekki in Lagos and on a farm in Ijebu to support what he sees as “an African renaissance”, citing the positive influence of Tokini Peterside’s Art X Lagos fair in growing the African visual art market. Less than a year ago, Nigerian-American artist Kehinde Wiley had opened his own Black Rock residency in Dakar, Senegal. Both are art world superstars who are financing their projects mostly through their own funds, but they will need financial and institutional partners to ensure their sustainability. 

SPORTS

The Basketball Africa League (BAL) announced the 12 teams (Angola, Egypt, Morocco, Nigeria, Senegal, Tunisia, Algeria, Cameroon, Madagascar, Mali, Mozambique and Rwanda) that will be competing in the inaugural season set to tip off in Senegal on March 13th. The launch of BAL shows the NBA’s commitment to growing the game on the continent. At the moment, African broadcast rights for NBA matches are still pretty cheap and basketball is clearly nowhere as popular as football, but the potential for mass adoption is real.

French development agency AFD and Paris 2024 announced a partnership to support 24 athletes to deliver social and environmental projects, both in France and in Africa. AFD is also currently building an online platform whose aim will be to promote and raise financing for sports development projects in Africa. The platform, dubbed “Sport en Commun” (Sports together), will be launched in June during the Africa-France Summit in Bordeaux.

The ‘Match in Africa’ opposing Roger Federer and Rafael Nadal in Cape Town on February 7th raised over $3.5m to support early childhood development initiatives in schools all over Southern Africa. It also hit a Guinness World Record for the highest number of people in attendance at a single tennis match – over 51,000.  

CALLS FOR PROPOSALS (ANIMATION)

The Africa Digital Media Foundation (ADMF), in association with Heva Fund, Rubika, ADMI, and the Association of Animation Artists will be supporting select East African animators to attend The Annecy International Animation Film Festival and Market, which has a special focus on Africa this year. Interested animators should apply here. 

The 4th edition of Digital Lab Africa, the platform dedicated to digital creative content, is calling all African creatives to submit their projects in animation, video game, digital art, immersive realities and music before March 1st, 2020.

See a trend here? Yes, French development agencies are very much interested in supporting the growth of the animation and gaming sector in Africa. Animation production requires big teams and the sector has the potential to create a large amount of jobs for the youth through outsourcing or original content creation. However the market for African animation is still basically non-existent, with only a couple buyers willing to pay ridiculously low prices per episode. There is a way to game the system (no quick fixes though, TIA) - hit me up if you want to hear more.

EVENTS

AfDB will be holding its Fashionomics Masterclass in Nairobi on February 26 and 27. The class will engage local creative entrepreneurs operating in the textile, apparel and accessories industries to equip them with the know-how to establish successful fashion brands from concept to execution. This Masterclass sold out very quickly - demand is very strong for this type of hands-on business training dedicated to the creative industries. There’s an opportunity here to standardize and scale - who will take it?

I will be at MIP TV in Cannes on March 30th, 31st, and April 1st, where I will be facilitating the MiP CLINIC - DRAMA on How to Producing in and with Africa, TV Drama’s Last Frontier:

With the steady rise of global platforms, the next hit TV drama can now come from anywhere. In this context, content from Africa is not only the last frontier, it also presents potential crossover appeal to audiences in Europe and America. What are the right strategies, opportunities and partners to produce the future top dramas from Africa?

Also keep an eye on the 2nd meet of the ARES Fighting Championship, the Afro-European MMA League launched by Vivendi Sports, taking place on April 3rd in Brussels. I think they are onto something - come see it for yourself if you are nearby.

And finally, mark the Africa-France Summit on Sustainable Cities in your agendas. It will take place in Bordeaux, France from June 4-6 and will feature several sessions on Sports and Creative Industries development and investment. I will be there!