Africa’s vibrant entertainment sector is gradually receiving financial boosts from Venture capital (VC). VC firms are increasingly recognizing the potential of the continent’s creative industries as their investments reach new heights. Historically, venture capital (VC) investment in African entertainment industries has been relatively limited compared to other regions of the world.
Several factors contribute to this, including the growth of Africa’s middle class, increasing internet penetration, and the rise of digital platforms for content distribution. These factors create opportunities for VC firms to invest in sectors such as music, film, gaming, and digital media across the continent. While the scale may still be smaller compared to more established markets, the trend towards increased VC interest in African entertainment is observable.
Between 2012–2022, 58 private capital investments totalling $346 million have been registered, according to the African Private Capital Association (AVCA). Interestingly, VC made up roughly 67% of these investments over the past ten years, with private equity coming in second at 33%. This may seem modest compared to overall VC activity in Africa, but it signifies an impressive advancement.
This rise in investment reflects the undeniable potential of Africa’s entertainment sector. With a young and growing population of over 1.4 billion, a booming mobile phone market and disposable income, the continent boasts a massive audience eager to consume content. From reports, it is noticeable that the continent is no longer satisfied with a steady diet of international blockbusters and television shows. The demand for local stories, told by local voices, is mounting.
UNESCO’s 2021 report, “African Film: A Booming Industry,” estimates the film and audiovisual industries alone could generate a staggering $20 billion annually. According to AVCA, “In terms of their geographic distribution, South Africa has attracted the largest share of private capital investments in Africa’s creative industries at 24%.”
Egypt comes in second place with 14% of these investments, after South Africa. In recent years, the nation has also become a prominent hub for technology on the continent. “Nigeria and Kenya, two of Africa’s largest private capital markets, have each accounted for 10% of these investments,” says AVCA.
Jeff Schlapinski, Managing Director of Research at the Global Private Capital Association (GPCA), an independent, non-profit membership organization, points out that the markets that led VC investments in media and entertainment in terms of deal value were South Africa with $22.5 million, Nigeria with $5.7 million and Egypt at $2 million.
So, where exactly is VC money flowing? While data is limited, some trends are emerging. Streaming platforms and mobile gaming are hotbeds for investment, fueled by improving telecommunications infrastructure across the continent. This paves the way for increased data consumption and a fertile ground for on-demand entertainment.
Looking ahead, the future of VC and African entertainment appears bright. As PwC’s Africa outlook highlights, continued investment in the telecommunications space will be crucial for the entertainment industry’s growth. The rise of VC in African entertainment is a win-win. Investors gain exposure to a dynamic and high-growth market, while African creatives receive the financial backing they need to bring their stories to the world. This investment not only empowers African voices but has the potential to reshape the global entertainment industry.
