Communiqué 50: How to invest in Africa’s creative industry, Part 2

Here’s what African creative economy investors and entrepreneurs need to do to ensure that the capital flowing into the industry doesn’t waste.

1. Dancing to the tune

2023 was a dream for Mavin Global, one of Africa’s most prominent music entertainment companies. It ended the year with the most successful Afrobeats song of all time, Rema’s Calm Down, which raked in commercial and award success in equal measure. Its roster was also blossoming, producing breakout star after breakout star. But 2024 was about to be even better.

In the early parts of the year, the company secured a majority acquisition from Universal Music Group, in a deal reportedly valued at $150-200 million. This was a major liquidity event for Africa’s creative industry, and it was a long time coming.

A few years prior, in 2019, Washington-based Kupanda Capital in partnership with TPG Growth, a subsidiary of the U.S. private equity firm TPG, injected $5 million into Mavin Global in a deal valuing the company at $9.5 million. A follow-on investment round from Kupanda saw Mavin's valuation rise to $25 million. With this war chest, the company capitalized on the worldwide growth of Afrobeats, incubating and launching artists like Rema and Ayra Starr to global stardom.

In 2022, Africa was the fastest-growing continent for recorded music consumption, and annual music streaming revenue was projected to triple to $314 million by 2026 from $92 million. Given this trajectory, it was only natural that a significant percentage of creative industry investments focused on the continent’s music industry, as foreign investors from Kupanda to Warner Music tried to capture a piece of an expanding pie.

The Film and TV industry was not left out in this deluge of investments. French broadcast giant Canal+ made strategic acquisitions and streaming platforms like Netflix and Amazon Prime funded original content development. Netflix, in particular, spent $175 million in sub-Saharan Africa to license and produce content between 2016 and 2022. Africa’s gaming industry also attracted investors, with Sony launching a $10 million fund to support it.

These sectors have captured a significant part of the continent’s capital inflow, but several investments are yet to produce the expected results.

In part one of this essay, we outlined the problems with creative industry investment. In part two, we will explore the strategies that ensure sustainable growth and global competitiveness.

2. The rivers flow outward

Investing in Africa’s creative industry comes with some baggage. It isn’t enough to simply write checks and sit back, investors often need to become active operational partners as well.

For instance, two years before Kupanda Capital’s investment in Mavin, the firm sent key members of its team to Lagos to help structure, formalize, and digitize the company’s operations. Rima Tahini, an investment associate at Kupanda, not only helped set up the deal but remained in Lagos to run Mavin’s A&R department. Tahini’s on-ground presence was crucial for Kupanda as it allowed the firm to understand market dynamics in real-time, navigate local operational challenges, and build relationships with industry stakeholders.

Similarly, investors in The Black Book were instrumental in clearing roadblocks that typically hamper Nigerian film production, like getting location approval. “They didn't just help us make the film, they helped protect all the investors, ensuring that we saved money where we could to make sure investors recouped their money,” Editi Effiong, the film’s director, said of Volition Capital’s involvement in the process.

However, this hands-on partnership must extend beyond solving immediate operational problems to building export readiness into creative products. This component is crucial because the path to profitability for African creative products lies in markets beyond the continent. While local markets remain important, media and creative products are often competing with food and other necessities across most countries. This makes the economics of creative investments significantly less profitable. However, a more global outlook allows the industry to tap into bigger and richer markets. And investors can help make that happen.

3. For the love of standards

When thinking about exports and global competitiveness, standards are everything. They make and break a business, and they secure or spoil an investment. For investors looking to make returns from the creative industry, there must be a deliberate approach to ensuring that their capital flows into companies and projects operating with global standards and processes. Here are a few ways to ensure that happens:

I. Training, technology, and practices

When British actor John Boyega visited Nigeria earlier this year, he alluded to a gap in standards and processes, which, according to him, made global film studios hesitant to come to Nigeria. “A lot of studio execs that I’ve worked with or developed projects with have an interest to come into Nigeria and film, but somewhere along the way, that interest just dwindles because of either somebody else they’ve spoken to that’s had an experience, and all of a sudden, they go, no,” Boyega said.

Essentially, practices and processes that work locally are often not sufficient for anyone with a global outlook. There has to be more, and this comes in the form of investing in training for local talent, adopting cutting-edge technology, and adhering to best practices in areas like film financing and bookkeeping, scriptwriting, sound engineering, etc. African production houses like Triggerfish Animation and Iwaju Studios have embraced such standards, enabling them to secure co-productions with global studios like Disney, and ensuring their stories reach a global audience.

II. Local relevance, global appeal

African creatives must strike a balance between showcasing unique local stories and cultural elements and creating products that resonate with international audiences. This involves crafting narratives and aesthetics that are culturally distinct yet universally relatable. The success of films like The Woman King and Aníkúlápó on Netflix highlights the appeal of stories deeply rooted in African heritage but presented with a universal narrative structure and production quality.

4. Crossing the divide

Anyone who’s done business in Africa knows that investing in one industry almost always means you have to invest in three or four others. Because one industry can’t stand alone without leaning on others. We see this in tourism and the creative industry, for instance.

Both are inextricably linked, as creative expressions like art, music, and fashion often serve as attractions for travelers. Events such as Art X Lagos and Lagos Fashion Week exemplify this synergy, drawing international visitors while showcasing African creative talent. These events boost the local economy through increased demand for hospitality, transportation, and retail while positioning African destinations as vibrant cultural and creative hubs.

Similarly, the technology sector provides vital tools for the creative industry to expand its reach and monetize its content. Platforms like Netflix and Spotify have brought African films and music to global audiences, creating new revenue streams for creators, and several African fintech companies have grown their market size by investing in media products like reality TV shows. Telecom companies also play a role by bundling affordable data packages with streaming access, increasing local content consumption and accessibility. MTN’s Buffet plan in partnership with YouTube is a prime example of this cross-sectoral partnership.

This also spills over into what elements of the value chain receive the most funding. For instance, in Nigeria’s film industry, investments often focus on production talent and resources, while pre-production (scriptwriting, casting) and post-production (editing, marketing) do not receive as much capital. This disparity limits the quality and reach of the products. But by investing in training programs, funding for story development, post-production studios, and distribution networks (both physical and digital), the quality and global competitiveness of Africa’s creative outputs will skyrocket.

South Korea’s investment in its entertainment industry provides a template. The Korean government and private sector collaborated to pour capital into every point of the value chain from training schools for artists to state-of-the-art production facilities. As a result, South Korea's music, film, and drama industries are now global powerhouses, contributing billions to its economy.

5. Lest we forget infrastructure

In Africa, the shortage of infrastructure—such as film studios, concert venues, art galleries, and distribution networks—continues to limit growth. This means that there’s only so much that the creators and producers of cultural goods can do in their local markets.

Creative industry consultant Marie Lora-Mungai writes:

“You cannot nurture new music stars without a network of performance venues of all sizes. You cannot monetize local content without more distribution options, be they cinemas, television channels, or digital platforms. You cannot improve production quality without properly equipped physical film studios. You cannot produce affordable African fashion without factories and manufacturing hubs that lower costs. You cannot produce affordable African fashion without factories and manufacturing hubs that lower costs.”

Africa needs these investments urgently — from governments and private sector investors. There have to be more film cities, music recording complexes, and cultural centers. Additionally, there must be more robust intellectual property frameworks to protect creative work. The market also requires more advanced digital infrastructure such as data centers and high-speed internet to support the growing demand for streaming and digital content.

6. In the clutch

The surge in capital flowing into Africa’s creative economy is a testament to its potential. From music to film, gaming to fashion, investors are increasingly recognizing the continent’s creative products as a viable asset class. But investors can only do so much.

While the investment landscape is evolving and the challenges hampering the industry’s growth are slowly dissolving with the influx of capital, several creative businesses remain unprepared for the kind of growth they are hoping for. Too many of them are not ready to absorb the capital they crave and scale to the level it requires. So, the onus is on the creative entrepreneurs to rise to the challenge —by becoming more investment-ready, by building with a global outlook, and by structuring their businesses in ways that ensure they can compete globally. There is capital, but it also needs to flow into the right places.