The View From Africa: What you need to know to understand our continent
April 20, 2023
In this View From Africa piece, Cynthia Mumbo Founder & CEO of Sports Connect Africa, looks into some of the key trends in Africa and why the NBA is so successful in the region.
The African sports business industry is an exciting and rapidly growing sector. With the growing popularity of sports, the African market is attracting more investment from both domestic and international sports organisations.
There are numerous opportunities for investors to explore on the African continent, ranging from the NBA and FIFA to the NFL and CAF. This article will provide an overview of the African sports business industry, including its current state, potential growth areas, and challenges. We will also discuss some of the industry’s key players and their success strategies. Finally, we will consider how technology can help drive additional growth and development in this sector.
Understanding the continent
The African continent has a young and rapidly growing population, with over 60% of the population under the age of 25. By 2030, young Africans are expected to constitute 42% of global youth. As a key target audience for sports and entertainment, this demographic represents a significant opportunity for sports business. Furthermore, mobile penetration in Africa is high. By the end of 2021, 515 million people in Sub-Saharan Africa had subscribed to mobile services, accounting for 46% of the population, an increase of nearly 20 million from the previous year. By 2025, nearly 100 million new subscribers will have joined, bringing the total number of subscribers to 613 million (50% of the region’s population). This has led to a surge in digital consumption, with many Africans using mobile devices to access social media, video streaming services, other digital content and for mobile payment. The digital landscape is rapidly evolving in Africa, and this is likely to have a significant impact on the sports business industry. In the near future, we can expect to see increased investment in digital platforms, social media, and mobile applications that are tailored to the African market. This will create new opportunities for sports business, as well as new challenges as companies seek to navigate the unique cultural, linguistic, and regulatory landscapes of different African countries.
Fintech, Mobile Money and Micro transactions
Fintech, mobile money, and microtransactions are rapidly changing the African financial landscape. The use of digital financial services is increasing at an unprecedented rate due to the increasing adoption of smartphones and mobile internet connectivity. This financial technology revolution is expected to have a significant impact on the African sports industry, from how fans interact with their favourite teams to how sports organisations manage their finances.
Fintech is the application of technology to the delivery of financial services. Fintech has been especially important in bringing financial services to the unbanked population in Africa, which has traditionally been excluded from the formal financial system. Mobile money has been a game changer in Africa. It is a type of fintech service that allows users to make payments and transfer money using their mobile phones. Their mobile numbers serve as bank accounts.
Because of its convenience, low transaction costs, and accessibility, mobile money has grown in popularity in Africa. According to a GSM Association report, mobile money services are available in 96% of Sub-Saharan African countries, with over 320 million registered mobile money accounts. This has resulted in an increase in microtransactions, which are lower than $10.
Microtransactions are especially important in the African sports industry, where the majority of fans earn low wages. Consider this scenario: you develop a solution that generates $2 for every 2 million transactions as a football team with a large fan base in Africa. That is $4 million (deduct costs). Microtransactions allow fans to buy tickets, merchandise, and other sports-related services in small, affordable increments. This has the potential to boost overall revenue generated by African sports organisations while also making it easier for fans to interact with their favourite teams.
How the NBA is winning in Africa.
NBA Africa and the Basketball Africa League (BAL) are two major players in Africa’s sports business industry, promoting basketball and creating opportunities for athletes and investors. NBA Africa is a subsidiary of the NBA that has been present on the continent since 2011 and was officially launched in 2020 with the mission of expanding the NBA’s presence in Africa and developing basketball talent across the continent. NBA Africa is based in Johannesburg, South Africa, and it is involved in a variety of initiatives aimed at promoting basketball in Africa. These initiatives include the NBA Academy Africa, which provides world-class training and education to top young basketball talent, and the Jr. NBA program, which teaches basketball skills and promotes the game among children.
Basketball Africa League (BAL) is a professional basketball league founded in 2019 in collaboration with the NBA. The league, which includes 12 teams from across Africa, aims to promote basketball development in Africa while also providing opportunities for players and teams to compete at the highest levels of international competition. Basketball is also being used by the BAL to help build infrastructure and create economic opportunities in Africa.
Challenges faced by players in the sports industry.
Despite Africa’s sports business industry’s potential for growth and development, significant challenges must be addressed. One of the most difficult challenges is infrastructure. Africa has 54 countries, over 2000 languages, and a wide range of cultures and norms. What works in Nigeria may not work in Ghana or elsewhere in Africa to the east. It is critical to comprehend these dynamics.
Many African countries lack the necessary facilities and equipment to support a thriving sports industry, which can impede athlete development and industry growth. Another issue is a lack of capacity and capability. There aren’t enough Africans who are knowledgeable about sports management and operations. Furthermore, political insecurity, corruption, and regulatory barriers can all pose difficulties for the African sports industry.
In conclusion, it is safe to say that the potential for sports business on the continent is enormous; however, teams, leagues, and investors must have a long-term perspective on the potential of sports business on the continent. The young population, as well as the mobile and digital landscape, present a clear opportunity for investment. Leading the way are brands such as the NBA, FIFA, and CAF, the local governing football authority affiliated with FIFA.