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Africa’s booming sports business creates new investor ecosystem
Just over five years ago we published The Next Africa to shed light on the rise of African markets and the resulting shifts in how businesses, governments, and individuals should think about opportunity in a continent of over 1.2 billion people.
We offered some core projections in the book, a number of which have materialised. Africa’s startup scene has produced $1bn unicorn companies, a global IPO, and exported innovation abroad.
From 2015 to 2020, venture capital flowing into African markets doubled or quadrupled depending on measurement estimates.
The continent’s creative industries are also in an extended breakout moment, producing movies, music, and fashion that have risen to the top of streaming service watch lists, the Billboard charts, and New York runways.
Powerhouses, like Netflix and Universal Music Group, are now turning to Africa for talent, eager to tap into local markets and meet growing global demand for African originated and produced content.
Despite all we included, one major business and cultural influence opportunity we overlooked in Africa was the growth of sport and leisure.
Africa’s sport industry
In the last five years, the underlying potential of Africa’s sport industry is best captured in the NBA’s expansion across Africa culminating in the 2019 announcement of the launch of the Basketball African League (BAL).
Since 2003, the NBA has steadily increased its presence in Africa starting first with Basketball Without Borders, its primary development and community outreach program, and the 2017 establishment of the NBA Africa Academy in Senegal, eventually expanding into areas of commercial interest.
In 2016, the league reached a multiyear deal with Econet Media to broadcast over 500 NBA and WNBA games each season and in 2015, 2017 and 2018 played an All-Star NBA Africa game in South Africa.
As the NBA’s first professional league owned and operated outside the United States, the 12-team BAL is an acknowledgement that Africa’s sports market and local talent can drive needed growth for the association.
NBA commissioner Adam Silver said that the league is “committed to using basketball as an economic engine to create new opportunities in sports, media and technology across Africa” and in August named Victor Williams, an investment banker, the new CEO of NBA Africa.
With the continent’s middle-class estimated to reach 1.1bn with 690m smartphones in Sub-Saharan Africa by 2050, there will be many eyeballs to watch future games at home and fill today’s unbuilt or underused stadiums.
Football remains the real slam dunk
As basketball attempts to build a local fanbase, football remains the most popular sport on the continent. There are hundreds of premier league teams playing in national leagues with league champions competing for the Confederation of African Football (CAF) cup.
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However, despite local leagues, European football remains hugely more popular.
Earlier this year Chinese TV broadcaster StarTimes announced it acquired the rights to the English FA Cup in sub-Saharan Africa, and in 2018 Rwandan President Kagame announced a controversial £30m deal with Arsenal in an effort to boost local tourism and strengthen the global brand of Rwanda.
African influence in European and American sports markets will continue to rise as these markets seek to tap into Africa’s growing middle class buying power.
In tandem with formal sports, leisure activities grow
As Africa’s formal sports market grows, so is the market for everyday sport leisure activities like cycling, biking, marathon running and motorcycling. Kenya has a budding leisure riding scene and a motocross race series that culminates in a national championship.
South Africa’s e-commerce Sports & Outdoor segment projected 2020 revenue is $429m with an estimated 11.6% annual growth rate through 2024. While Kenyan and Ethiopian runners have long dominated marathons globally, local marathons are skyrocketing in popularity.
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The Lagos City Marathon had just 50,000 registered participants in 2016, but by 2020 this number grew to 150,000. Outside running, the Union Cycliste Internationale (UCI) announced that Rwanda or Morocco will host the 2025 Road World Championships, one of cycling’s “triple crown” races, becoming the first African country to do so. The larger ecosystem around sports leisure activities provides ample opportunities for further economic growth – from added tourism to increased consumer spending on athletic gear.
As host of the 2010 World Cup, South Africa effectively used the world’s largest sports event to reshape its image across the globe, challenging old perceptions that African countries are too underdeveloped to support major sports events.
Beyond the immediate economic benefits, including new infrastructure projects and media deals, the rise of Africa’s sports and sports leisure industry provides an avenue for stronger people-to-people times between African markets and other global hubs.
These interpersonal connections, drawing on shared values and experiences, can not be underestimated in attracting more investment to the continent.
Bottom line: Ultimately, sports serves as yet another industry African governments can support to diversify their economies, enable local job creation, and increase their resiliency. While the NBA is trailblazing a new path in African market entry, we expect more to follow.