Author: Aubrey Hruby
Affiliated organization: Atlantic Council
Type of publication: Issue Brief
Date of publication: September 2018
By 2035, sub-Saharan Africa will have more working-age people than the rest of the world combined. African governments collectively need to create eighteen million new jobs each year to absorb the large, young, and ambitious population coming to working age. But technological advances, combined with the underdeveloped infrastructure of most African nations, mean that the tried and true model of export-oriented industrialization, which allowed the East and Southeast Asian economies to develop very rapidly, is unlikely to produce adequate job creation in the vast majority of African markets. In fact, manufacturing as a share of total economic activity in Africa has stagnated at about 10 percent, and—though there are notable exceptions, such as Ethiopia—the continent as a whole is deindustrializing. Agriculture still continues to serve as the backbone of most African economies, with over 70 percent of Africans earning a living in that sector.
But as Africa urbanizes, the composition of economic activity is rapidly changing, shifting away from agriculture and towards the services sector. In 2015, services accounted for 58 percent of sub-Saharan GDP (up from 47 percent in 2005). More significantly, 33 percent of African youth are now employed in services.
The services sector is broad and dynamic, including everything from accounting firms to roadside barbers. And an often-overlooked source of growth in the sector, especially in Africa’s larger and more developed markets such as Nigeria, South Africa, Kenya, and Morocco, are the creative and cultural industries (CCI). African film, music, and fashion are exploding in popularity on the global stage and should be seen as a force for economic good.
From Nigeria’s Nollywood film industry to the visual arts in South Africa, CCI are creating a new realm of opportunity. Africa’s cultural goods sector is estimated to employ about half a million people and generate $4.2 billion in revenue on the continent, albeit mostly through the informal economy.
However, if CCI could become more formalized and thus capitalized, CCI could become a driving force in economic development. African governments, foreign aid agencies and multilateral institutions should consider elevating CCI within their development strategies.
Snapshot of the Creative and Cultural Industries in Africa
Africa’s rich cultural assets have influenced global culture since the horrors of slavery carried African traditions to the Americas and Europe. Though slaves and their descendants enriched their new countries and communities, creating entirely new categories of music and art, they were rarely permitted to receive commercial returns on their cultural contributions. And cultural exports from Africa continued to be undervalued, and appropriated by non-African artists, well into the post-colonial era.
The same type of racial discrimination that prevented black American artists from sharing in the profits of their creative pursuits historically disadvantaged Africans in their efforts to monetize their talents. Superstar Nigerian musician Fela Kuti has never gained proper recognition from Western record companies despite selling millions of copies of his sixty records. Fela commented, “American record companies seem to feel I am antiwestern, anticapitalism, anti the kind of society they like.” As a result of this type of exclusion, the creative and cultural industries in African markets today lack the formality and professionalism of their global counterparts. However, globalization is rapidly changing this reality, and presenting African countries the opportunity to harvest greater returns from the international entertainment market.
However, if CCI could become more formalized and thus capitalized, CCI could become a driving force in economic development. African governments, foreign aid agencies and multilateral institutions should consider elevating CCI within their development strategies
Today, CCI plays an integral role in the global economy, generating $2.25 trillion in revenue and employing 29.5 million people. Africa accounts for less than 3 percent of the total revenue, and 8 percent of the total CCI jobs, leaving room for tremendous growth.
Demand for African cultural goods has increased both within the continent and internationally. There is a global appetite for representations of African cultures—even fictitious ones. The Hollywood blockbuster Black Panther, which showcased African actors, music, and design influence, is now the highest grossing superhero film of all time, bringing in over $1.2 billion at the box office globally. American celebrities and first ladies wear African fashion and Nigerian music pulses on the airwaves. Nollywood, Nigeria’s film industry, accounts for 2 percent of Nigerian GDP and directly employs 300,000 people. Indirectly, Nollywood is estimated to employ over one million people from actors to directors, hair stylists to sound technicians, marketers to advertisers. In South Africa, creative industries contribute about 2.9 percent to GDP and account for 3.6 percent of employment.
While most CCI is consumed locally in African markets, transatlantic musical collaborations are growing and there is deepening integration between US record labels and African (mainly Nigerian) artists. Nigerian singer-songwriter Tiwa Savage’s collaboration with the American R & B singer, Fantasia Barrino, led to a Grammy nomination in 2010, and WizKid’s feature on Drake’s song, “One Dance,” led to a multi-album worldwide deal with RCA Records/Sony Music International. African music is now accessible on international services such as iTunes, Shazam, and YouTube, and Spotify opened offices in South Africa in early 2018.
Africa’s creative and cultural industries are unmistakably on the rise —especially in the US and European markets, which will make them more and more attractive to investors. This matters, because additional capital is needed to commercialize and distribute these products to the global market, and to maximize the sector’s profit and employment potential for African economies.
CCI By Sub-sector
The United Nations Educational, Scientific, and Cultural Organization (UNESCO) defines CCI as activities “whose principal purpose is production or reproduction, promotion, distribution or commercialization of goods, services and activities of a cultural, artistic or heritage-related nature.” CCI has eleven sub-sectors: television, visual arts, newspapers and magazines, advertising, architecture, books, performing arts, gaming, movies, music, and radio. This brief covers only the film, music, and, fashion industries given their size, relative maturity, measurability, and potential for future growth.
Nollywood is the central hub of Africa’s film industry and is the second-largest film industry in the world by volume. Due to working capital constraints and the largely informal nature of Nollywood, film production is rapid, averaging about forty movies per week—a volume that falls short of only India’s Bollywood industry. Over the last three decades, Nollywood has been largely ignored by the rest of the world, but has built a large and dependable audience of Nigerians. Today, that domestic market is expanding outside Nigeria and the Nigerian diaspora, and filling the continent-wide demand for programming that is made by Africans about Africans. Most titles are recorded in English and usually sell over 200,000 copies, allowing them to turn a profit within two to three weeks of release. These profits are then recycled into the new round of production.
As the industry matures and production value improves, Nollywood films have garnered greater international recognition and commercial success, with some available to stream on platforms like Netflix. The Wedding Party premiered at the 2016 Toronto International Film Festival and quickly became the first Nigerian film to pass the $1.3 million mark, only to be surpassed by its sequel The Wedding Party 2 in 2017.
With the success of Nollywood and its growing role in the Nigerian economy (it contributes $7.2 billion to GDP), the government has increasingly acknowledged the importance of the industry for economic development. Abuja has committed a budget of about $8 million through Project ACT, which aims to improve and promote three key components of the movie-making value chain: capacity building, film production, and distribution. The government has also pledged tax relief aimed at fostering growth in the film industry.
Before the rise of Nollywood, Egypt was an internationally-recognized global powerhouse in film production. Prior to 2011, Egypt produced about forty films a year and has accounted for 75 percent of the films made in Arabic-speaking countries since 1980. Political and economic challenges have since adversely affected Egypt’s industry—production numbers plummeted after the events of the Arab Spring. However, the industry is beginning to recover as younger filmmakers and older stars return to remake the industry in a new era.
The film industry is also growing rapidly in South Africa and Morocco, though not through original content production, as in Nollywood. Instead, these countries have become destinations for many of the world’s top filmmakers. Cheaper production costs, tax credits, and safe environments lead many to film in these alluring landscapes: from Safe House and Eye in the Sky in South Africa to American Sniper and Sex and the City 2 in Morocco. Ahead of many of their peers, the infrastructure in Morocco and South Africa provides filmmakers with the necessary tools for high-end movie production. State of the art complexes such as Cape Town Film Studios’ $35 million facility enhance South Africa’s competitiveness to attract production. Employing just four thousand people in 1995, the South African industry created more than 21,000 jobs by 2017 and contributed about $430 million to GDP.
African music has long influenced music genres in the West. However, African-produced music gained little recognition outside of the continent until the era of independence. In the 1960s and seventies, Afrobeat, a combination of West African jazz, and funk styles pioneered by Fela Kuti, influenced a generation of American and British artists. But the appeal remained niche and diaspora-focused from the 1980s until around 2010. As streaming services spread throughout Africa with broadband penetration and mobile telephony, music made on the continent has gained global recognition from everyday listeners to music superstars like Drake and Nas. Nigerian pop sensation Davido credits the internet and social media with sparking the transition of African music from the periphery to the mainstream in western markets.
Today Nigeria is the hub of music creation in Africa, producing over 550 albums annually. Over the last decade, “Naija” music has skyrocketed in popularity and today Nigerian live performance exceeds $100 million in annual revenue. Nigeria has a strong domestic digital music business and international players are taking a bigger interest. US and European record labels continue to sign Nigerian artists as they gain visibility through collaborations with Western artists. Los Angeles-based Universal Music Group recently acquired one of East Africa’s largest labels, AI records, and has opened a new office in Lagos to focus on the region. Universal has additionally signed established artists from Ghana, South Africa, Côte d’Ivoire, Togo, and Cameroon, as they build a pan-African music operation.
Today, CCI plays an integral role in the global economy, generating $2.25 trillion in revenue and employing 29.5 million people. Africa accounts for less than 3 percent of the total revenue, and 8 percent of the total CCI jobs, leaving room for tremendous growth
The music industry is contributing to the growth of the creative sector not only in Nigeria, but also in South Africa and Kenya. South Africa’s total music revenue is set to reach $178 million by 2020, supported by revenue from digital music streaming. A strong mobile music sector will support rapid growth in Kenya as well. Kenya’s total music industry revenue is expected to rise to from just $22 million in 2017 to $32 million in 2021. Internet penetration and the spread of mobile technology will continue to support increased consumption of digital music.
Demand for apparel by African designers is no longer limited to local markets. Western fashion houses have long tapped the African market for inspiration, from Yves Saint Laurent’s 1967 “African” collection to Stella McCartney’s incorporation of Ankara prints in her spring 2018 collection. Given the long-standing demand for the often bold, bright, and lively nature of African designs, African designers themselves are finally gaining prominence abroad. Amaka Osakwe, designer of the fashion line Maki Oh, gained commercial success thanks to pop sensations Beyoncé and Rihanna, and to former first lady Michelle Obama wearing her styles.
The majority of African megacities now hold fashion weeks to showcase African designers, including Johannesburg, Cape Town, Lagos, Accra, Dakar, Cairo, and Nairobi. In addition to growing the local fashion market, African designers increasingly participate in New York, London, and Paris fashion weeks. Today’s African designers are global, often operating in European, American, and African markets simultaneously. The Nigerian designer Deola Sagoe recognized the appeal of African styles when studying in the United States in the 1980s. The core element of Sagoe’s designs rely on Aso Oke fabric, a traditional handwoven cloth from Nigeria, which has attracted the attention of Vogue and A-list celebrities.
The global fashion industry is projected to generate $5 trillion in the next decade, and African designers are looking to capture a larger piece of that market. African designers operating at the heights of global fashion are positioned to take a greater share of the $420 billion luxury fashion industry and inspire local designers focused on sub-Saharan Africa’s $31 billion apparel and footwear market.
Not only is the size of the market for CCI growing in sheer numbers, but the underlying demographic shifts are more favorable to the film, music, and fashion industries. Globally, millennials are responsible for over two-thirds of all streams on Spotify and the median Hulu subscriber is just thirty-one years old, showing a strong youth bias in terms of digital media consumption. Africa is a young continent. About two-thirds of its population is currently under the age of thirty, compared to just one-third in Europe and North America. Over 43 percent of Africa’s population currently lives in urban areas, and 90 percent of urban population growth will take place in Asia and Africa in the coming decades. These young urbanites are more likely to have mobile and broadband access and are increasingly middle class.
A larger middle class will result in more disposable income to spend on live concerts, movie tickets, and the latest fashions. Between 2011 and 2015, spending in South African households on recreation and culture, and on clothing and footwear, saw a real increase of 57.9 percent and 23.3 percent respectively. The shift to a younger, more prosperous middle class will continue to support the growth of CCI.
The growing penetration of internet and mobile devices throughout the continent supports a more robust CCI market. In sub-Saharan Africa, unique mobile subscriber penetration reached 44 percent by the end of 2017, up from just 25 percent at the start of the decade. In the coming years, the mobile subscriber base is expected to grow 4.8 percent per year. In Nigeria alone, there were 91.6 million internet users or about 45 percent of the population in 2017, most located in urban centers.
On a continent with only one cinema per million people, streaming services will play a pivotal role in the growth of the film and music industries. Mobile payments, well-established in markets such as Kenya, strengthen business models in the music and film industry. Spotify entered the African market with a launch in South Africa in May 2018. Next to the big global players like Spotify, YouTube, and Apple Music, there is a growing number of African streaming services, many focused on delivering African content. The music-streaming service Simfy Africa has grown from the South African market to include Nigeria and Angola. NotJustOkay, a Nigerian music blog, has visitors from 183 countries. Similarly, iRoko Partners, a media distribution company, has been extremely successful in both the Nigerian market and globally.
Globalized Entertainment Market
While the market for CCI grows within Africa, globalization opens access to international entertainment markets. The days when Hollywood just focused on the US market are over. The rise of a worldwide middle class has resulted in faster, broader consumption of the industry’s content. Filmmakers must consider the box office potential of their films in other regions like China, which would have been a distant concept just two decades ago. Streaming services for music and movies allow content to be marketed and accessed around the world instantaneously. African CCI is positioned to take advantage of the entertainment industry’s global view. A growing number of Africans are native or secondary English speakers, making their products more consumable given the global popularity of the language.
Global celebrity culture and Africa’s growing diaspora work in tandem to accelerate the spread of African music, film, and fashion to international markets. Centuries-long relationships between African, European countries and the United States mean that millions of Africans and people of African descent live in a country outside of their birth. The African Union estimates the size of the African diaspora at 170 million. Because of the diaspora and the market power of African Americans in regard to entertainment, African celebrities are gaining greater recognition in Western countries. South African Trevor Noah, host of the popular American comedy news program, The Daily Show, and Academy Award winner and Kenyanraised Lupita Nyong’o are just two such examples. After her Oscar win, Lupita Nyong’o went on to star, alongside multiple African actresses, in the Broadway musical Eclipse about the 2003 Liberian civil war. The play’s success highlights a growing appetite for African stories and African voices, often brought to the US market through the African diaspora.
Lack of Funding
Today’s funding for the creative industry often comes in the form of grants for non-commercial activities. A United Nations Conference on Trade and Development (UNCTAD) study in Zambia confirmed that the historic tradition of viewing the creative industries from a cultural rather than commercial lens leaves the industry dependent on public funds. A dearth of African millionaires eager to invest in the creatives leaves many entrepreneurs with few options to turn to for capital. But in more established markets, like Lagos and Cape Town, businesses investing in creative talent are beginning to emerge. Temple Management, a full-service management agency for those in entertainment, art, and media, is working to modernize and professionalize the industry playing the same role that the Creative Artists Agency (CAA) does in the US market.
Lack of Intellectual Property Rights Protection
The prevalence of movie and music piracy in Africa frustrates monetization efforts. Lack of intellectual property (IP) rights and enforcement limits an artist’s ability to earn a return on investment. The World Bank estimates that for every legitimate Nollywood film sold, nine are pirated.50 Furthermore, the Nigerian Copyright Commission (NCC) estimates the country loses over $1 billion annually to piracy. South Africa estimates it loses 44 percent of its DVD revenues, 15 percent of which is online. High piracy also deters international co-production and distribution opportunities in foreign markets. Music is regularly obtained in the Nigerian markets through illegal downloads, rather than legitimate music stores or streaming services that ensure artists receive their portion of a sale. Without a functioning IP rights system, many African artists leave the continent to pursue their talents elsewhere.
To African Governments:
Collect and Track Data
African governments need to expand and consistently track CCI statistics to support policy development and promote private sector investment. UNESCO’s 2009 guidelines for measuring the economic effects of the cultural industry prompted many African countries to begin country measurement. Kenya has taken a lead by publishing the Nairobi Plan of Action on Cultural Industries and facilitating the buildout of institutions such as the Music Copyright Society of Kenya and the Kenya Film Commission. However, the availability and quality of statistics varies widely across the continent countries can develop more impactful policy and partnerships to meet the needs of CCI.
Enforce Intellectual Property Rights
The successful distribution of music and film relies on stricter IP rights and stronger enforcement mechanisms. Laws need to be less ambiguous and updated to reflect current technologies. Regulating ownership and ensuring creative control over an artist’s work will expand potential export opportunities. It will also encourage additional investment as banks can be more certain of a return on investment.
To the United States
Given the competitive edge the United States has in the entertainment industry, American policy-makers should consider establishing a US-African CCI financing roundtable. This public-private platform should be led by the Overseas Private Investment Corporation (OPIC) and would draw upon sector experts to facilitate financing and investments that contribute to CCI growth. Knowledge exchange and collaboration among key actors will deepen understanding of Africa’s CCI market opportunities and risks. The roundtable should work to establish pathways of investment that can be packaged for investors with different appetites for risk.
Today Nigeria is the hub of music creation in Africa, producing over 550 albums annually. Over the last decade, “Naija” music has skyrocketed in popularity and today Nigerian live performance exceeds $100 million in annual revenue. Nigeria has a strong domestic digital music business and international players are taking a bigger interest
To International Organizations
The World Bank and IFC can better support CCI by creating job positions with responsibility for financing Africa’s creative and cultural industries. While the IFC works with clients in media, technology, and retail, it has not established an area of expertise in CCI. Taking a holistic view of the industry will better position the IFC to meet the needs of the industry’s interconnected players. Given the potential development impacts of CCI, these institutions need to dedicate the necessary talent to support the growing financial needs of the industry.
The digitized, global economy provides an opportunity for African CCI to play a more meaningful role in the continent’s development. From artists to distributors, Africa’s creative economy can provide modern jobs across multiple sectors and contribute to economic growth. Additionally, sharing African creativity with global audiences helps to change perceptions, encourage tourism and lays the groundwork for myriad cultural exchanges. African governments, businesses and investors must recognize the value of CCI, as without their support and promotion, the industry will find it increasingly difficult to remain competitive in global markets. Africa has long been rich in talent and creativity, and in today’s maturing markets, these artists and producers have the potential to stake their claim as part of the global mainstream.
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