Africa’s creative economy – ranging from fashion to filmmaking to live music to theater and other “content” – generates nearly $60 billion in revenues and thousands of jobs each year. But such creative businesses rarely fit the bill for traditional capital providers.
That market gap represents an opportunity for Nairobi-based HEVA Fund, which is investing in the creative economy in part to drive employment for youth who have turned to platforms like TikTok to capitalize on digital opportunities.
“The ripple effect of investing in creative businesses is massive in terms of it having the multiplier effect that we see from a job opportunity perspective,” HEVA’s Wakiuru Njuguna explained in a video interview in ImpactAlpha’s series “Pathways to Growth,” produced with the Collaborative for Frontier Finance.
“If you put in $10,000 in a film production, you get around five jobs.”
Njuguna herself worked in the creative industry under NEST, a collective of multidisciplinary artists based in Nairobi called and saw first hand the limits of the industry’s inconsistent grant funding. Bringing other capital providers into the creative economy became her priority. Njuguna has spent a decade figuring out how to bring in commercial capital and structuring pipelines for capital deployment into the creative economy.
Development finance institutions have begun to appreciate the job-creation potential of creative industries and have begun to commit capital. Last month, the International Finance Corp., and French development financier Proparco invested $50 million in equity in Helios Investment Partners to boost job creation in the sports and entertainment sectors. The African Export-Import Bank also launched a $1 billion film fund in May this year to develop Africa’s creative industry. This week, IFC, alongside Sony Innovation Fund Africa, backed Lagos-based Filmmakers Mart, one of Africa’s first integrated digital production platforms.
“In 2014 we were basically explaining what the creative industry is. Right now they understand what it is. The challenge they’re having is deploying,” Njuguna says. “So if you are able to model the ways in which they can deploy, then I believe that the creative industries will leapfrog in the next 10 years.”
HEVA is working to de-risk the industry via a blended capital in pan-African film fund. It identified film, fashion and live music performances as segments with clear business models and wants to double down its commitments to them with targeted funds and strategies.
HEVA launched a $40 million film fund last year, alongside the entertainment production company Next Narrative Africa to invest in film projects across Africa. The fund is seeking $30 million in equity and $10 million in grants, in which the latter will be used to de-risk film projects at the onset of scriptwriting and talent sourcing.
The film fund’s equity component will invest up to 30% in this pipeline of investment ready projects, so as to attract commercial and philanthropic funders.
Success stories
HEVA has developed ways to allow creatives to access capital, using the resources they have and without the rigid collateral requirements often sought in mainstream lending. The fund offers milestone-based debt financing, pegged to an artist’s intellectual property, or revenues generated from copyrights and royalties.
“In times where their [artists’] direct revenues from the business have not done really well, we’ve been able to capitalize or draw down from the royalties,” Njuguna said. “My interest is really being able to say that we’ve been able to crack the creative industries.”
In March this year, HEVA partnered with Longitude Capital, Kenya Bankers Sacco and other lenders and marketing agencies to launch two credit lines. The deal would disburse $5 million to 7,000 creative entrepreneurs, mostly young women.
The fund’s efforts are producing the kind of demonstrable proof points that commercial players need to get active in the industry.
A woman-led fashion house that needed capital received $20,000 in around 2015 and later $100,000 from HEVA to set up a storefront and a production facility. The company has since grown from having three to 30 employees.
Post-COVID, one of the fund’s many interventions was a $1 million short-term relief facility to help artists get back on their feet, alongside starting a dedicated savings group for artists and championing tax incentives for creatives.
During this time, a film company needed capital to upskill its staff and upgrade its equipment, to be able to land international projects. The company was able to land the projects and has now increased its revenues by five times since securing some funding from HEVA.
“We know that creators are actually driving businesses,” Njuguna says. “They are driving how we spend, how we consume. They’re even driving wellness, and how we look at the news that we are going to consume. Everything is driven right now around the creator economy.”
