• Home
  • News
  • Investing in the sports industry in Africa: an untapped lever for development

Investing in the sports industry in Africa: an untapped lever for development

July 10 2023 - News Release News Editorial

The sports market now accounts for around 5% of global GDP, with annual growth of 4% globally between 2015 and 2020. The overwhelming majority of this wealth, however, is concentrated in North America and Europe, and some regions of the globe remain on the sidelines. To realize the untapped potential of the sports industry as a lever for development in Africa, it is necessary to make known the economic opportunities it conceals, while improving the general framework for investment, the subject at the heart of the report Dynamics of development . in Africa 2023: Investing in Sustainable Development .

Investing in the sports industry in Africa: an untapped lever for development

By Will Mbiakop , Executive Chairman, African Sports and Creative Institute and Federico Bonaglia , Deputy Director, OECD Development Center

 

 

The sports market now accounts for around 5% of global GDP, with annual growth of 4% globally between 2015 and 2020. The overwhelming majority of this wealth, however, is concentrated in North America and Europe, and some regions of the globe remain on the sidelines. To realize the untapped potential of the sports industry as a lever for development in Africa, it is necessary to make known the economic opportunities it conceals, while improving the general framework for investment, the subject at the heart of the report Dynamics of development . in Africa 2023: Investing in Sustainable Development .

Sport in Africa, heritage and challenge for the future

On the scale of the African continent, sport only represents 0.5% of the GDP. Cultural issue? It’s hard to believe that physical exercise – from Senegalese navetanes to rites of passage in Rwanda – is such an integral part of Africa’s DNA. Such a discrepancy is more likely to be explained by a lack of commitment on the part of major players, particularly financial ones, who do not always see or take the continent’s potential seriously. For Masai Ujiri, first African president (Nigeria) of an NBA club, Toronto Raptors: “more investments, less alms; this is what Africa wants”.


Sport has always been practiced in traditional African societies. A real tool for human development, it is used in particular to support young people in the transition from the status of teenager to that of adult or warrior in society. Jukskei, nzango, archery, awale, jumping or various forms of wrestling are all authentically African sports that preceded the arrival of so-called “modern” sports such as football, basketball or rugby.

Transforming the trial: sport as a lever for development

Faced with the great challenges of the continent and the planet, sport is an element of response to the Sustainable Development Goals, in particular health and well-being (SDG 3), gender equality (SDG 5), education (SDG 4) but also economic growth (SDG 8), the fight against poverty (SDG 1) and the reduction of inequalities (SDG 10). These economic aspects deserve to be explored: World Bank studies show that the most diversified African economies offer the highest growth rates, as well as the most attractive human development indices (HDI). Across the African continent, 29 million young people aged 15 to 29 will enter the labor market each year by 2030 on average and will need to find a job.. It is therefore essential to find new sources of growth and employment, independent of the extraction of natural resources. African youth represent a growing share of the world’s youth: projections announce that in 2100, a third of the total population will be African. The challenge is therefore global!

A number of challenges are slowing down the development of the sports economy in Africa: lack of investment and access to it, poorly trained human capital, weak governance, and even the lack of infrastructure.

Sport: an economic sector in its own right

However, recently, we are witnessing the emergence of large-scale investment projects: the construction of the Stade du Senegal (280 million USD) or the Kigali Arena (108 million USD); the creation of the CAF Champions League , whose amount of prize money to be distributed among the participants will amount to 100 million USD; an Egyptian conglomerate’s $110 million investment in Tom Vernon’s Right to Dream football academy ; or the Decathlon stores which have invested around 80 million USD in Africa and whose annual growth figures are impressive.

In 2018, the Nigeria national football team, in conjunction with Nike, sold over 3 million shirts within an hour. The cause of this record: the design of the product, which took up the patterns of traditional outfits in the colors of the country. The general African public expects the sports sector to draw its inspiration directly from the cultural roots of the continent and assert its own identity on a global scale.

These projects illustrate the diversity of the sports value chain – infrastructure, sports academies, merchandising, professional championships, right up to the intersection of sport and entertainment: ‘sportainment’. They prove that African private sector leaders are beginning to take ownership of the huge opportunity that the sports sector represents. Contrary to a priori, Africans are ready to spend to consume culture in all its forms.

Make Africa a global sports hotspot

To succeed, the role model must be authentically African. This is also what Constant Nemale, founder of Africa24, defends. Created in 2009, this news channel now offers a sports (Africa24 Sport) and entertainment (Africa24 Infinity) package exclusively devoted to African championships, concerts and festivals. Mr. Nemale believes that hundreds of millions are worth investing in the sports media space, where streaming services are one of the most profitable opportunities.

In Togo, the NewWorld TV media made an impression by becoming the first African channel to win the rights to the 2022 Football World Cup, ahead of Canal Plus. The production and broadcast of the World Cup was of high quality, punctuated by local content in the local language, and with former African football celebrities as consultants. New World TV and Africa24, like the other networks and media, are key vectors of growth in the sector. Their reach with fans is essential to the influence of clubs and other rights holders: they thus bring great visibility to the sector and, of course, sponsors. 

Reinventing the African sport of tomorrow

Today, only 1% of global sports sponsorship amounts are invested in Africa. Yet the business potential there is huge, with a continent-wide population of 1.4 billion people, half of whom are 19 or younger, and a growing middle class. But marketing sport successfully, both professional sport and grassroots sport, requires several conditions to be met.

In the book Economics of Sport in Africa , the African Sports and Creative Institute (ASCI) presents 16 recommendations divided into three categories: 

  • Africa has a unique asset: its human capital. Education is therefore essential. 
  • The lack of data penalizes the understanding and analysis of the market, as well as strategic decision-making. We must therefore train and inform! 
  • The majority of sport-related income comes, contrary to popular belief, from grassroots sport. Indeed, it is household consumption that saves sport. We must therefore make mass sport the pillar of this economy and understand sport as a commercial product. This requires professionalization of the players in the sector.

Finally, it will be a question of reinventing the governance of African sport and creating authentically African economic models allowing the deployment of a business environment – ​​fiscal, legal, financial – favorable to the growth of the sport economy. 

Africa has everything it needs to become a sports mecca on a global scale. Now, to make this immense potential bear fruit, the ball is in the court of decision-makers and investors.


This blog is based on an expert meeting on investing in the sports industry in Africa, held on Friday 27 January 2023 at the OECD. The event was organized by the African Sports and Creative Institute (ASCI) and the OECD Development Centre , in partnership with SouthBridge Investments and Nkomkana Sports Funds.

References

    GSS Weekly Newsletter Registration


    Register your interest in receiving our free weekly sport and sustainability newsletter and get it delivered to your inbox every Thursday


    GSS Weekly Newsletter Benefits:

    • Free access to all the latest sustainability news and features

    • Free weekly newsletter featuring all the latest developments in sport and sustainability


    Register your details here:

     

    First name

    Last name

    Company

    Title

    Email

    Nation

    Read moreOECD