The African market, Ibrahim Sagna believes, goes well beyond the confines of the continent. It is much deeper, wider and more lucrative and includes the massive diaspora with its strong purchasing power.
He believes it is a market waiting to be tapped and that Africa is in the right position to be able to do so – through creative and sporting excellence, rather than simply relying on commodities or natural resources.
“The basic thesis,” he explains, “is that you start your emancipation around natural resources due to their global relevance; next you build an infrastructure base, then layer on top of it a strong consumer sector.”
It is the consumer sector that he is most interested in now. However, he has done his fair share of development-oriented investment. Following an initial career in private equity and hedge funding overseas, he worked for two of the most powerful investors in African infrastructure – the African Export-Import Bank (Afreximbank) as Global Head, Advisory and Capital Markets; and the Africa Finance Corporation (AFC), as Head of Financial Advisory Services.
Now, as head of Silverbacks Holdings, which he formally launched with partners about a year ago, Sagna clearly believes that the time is right to develop that consumer sector profitably, with its focus on technology, sports, entertainment, media, and lifestyle products and services.
Silverbacks Holdings, as Sagna explains, operates both as a passive and active investor. When it comes to early-stage technology, the firm often follows a passive approach where it invests in funds as a limited partner.
However, when it comes to slightly more mature operators in sports, entertainment and lifestyle sectors, Silverbacks adopts an active posture and will invest directly in the target companies.
What makes creative, entertainment, media, and tech such interesting asset classes at this time? Sagna lays it all down to the evolution of telecommunications technology.
GSM in particular, has allowed not only connectivity and convenience, but also the capacity to convey content and services to a formerly unimaginable number of people.
For example, he says that without GSM, the banking sector would not be what it is today in Africa. “Just imagine Africa without ATMs, PoS, or mobile banking!” The rapid global adoption of cloud-based internet and the general lowering of costs is accelerating the elimination of barriers and distances across the world.
The new wave of technology is alive and kicking in Africa. “Consider category leaders like Sabi and Omnibiz in the retail commerce space; Moove in the gig economy; and Flutterwave and Wave in the payments and remittances arena,” he enthuses. “Fortunately,” he adds, “we managed to invest early in each of these five tech rocket ships.”
Keeping the diaspora top of mind
Sagna believes that given the sophistication and power of technology, market size and reach are now at an inflection point for consumerism to really take off. While many still think of the African market as restricted to Africa, he views the African market simply as ‘African’ with no regard to geography.
“When you think of the continent in terms of disposable income, most think only of the 50m people making more than $10 per day. This metric creates the distortion that the market is not that big.
“Now step back and reconsider; think of the Africans who have emigrated outside the continent. You are now looking at very different numbers – approximately 200m people to be exact, who contributed $100bn to the African economy in remittances in 2022 alone.”
Sagna continues: “The market size is actually 250m with a strong buying power. Add African-Americans and others taken away from the continent – in the Caribbean or Latin America – and that’s another 150m at least. Altogether, this group can provide a formidable foreign currency hedge.”
The five best-performing tech companies in Silverbacks’ portfolio reflect this strategy. They are focused on providing services for Africa, its broader diaspora market, and beyond.
Sagna, and Silverbacks’ philosophy, is to keep the diaspora top of mind at all times. In the field of sports for example, the company is involved in the National Basketball Association’s Basketball Africa League, which aims to replicate the US’s immensely lucrative basketball league in Africa.
The Africa league is valued at a billion dollars and holds an annual tournament with 12 teams from 12 different countries of the continent.
Sagna says sports business is fundamentally anchored around media rights and corporate sponsorships. With this in mind, Silverbacks has chosen to invest in South Africa. The country commands over 40% of Africa’s private companies, with more than $1bn in annual revenue, as well as some of the most dominant media and telecom groups operating across the continent.
Its portfolio company, Cape Town Tigers (CPTT), is a basketball team newly created by a group of African-Americans solely as a result of NBA expansion into Africa. CPTT are the reigning champions of the South African basketball league for the last three years.
Investors see talent acquisition as a key aspect of the NBA extension into Africa. In the US, this year’s regular season Most Valuable Player is from Africa. The continent has become an ever-growing source of new recruits to the US NBA.
The issue, asks Sagna, is whether it possible to construct something solid in the continent where all that talent is and catch players well before they migrate to Europe, China or Australia for more expensive trade=off fees?
“Without a doubt,” he answers his own question. “The teams on the continent are yet to become fully franchised by the NBA, and the ones selected will see their value drastically appreciate.”
Sports and entertainment go hand in hand
Sagna believes there is a natural connection between entertainment and sports and this is why sports has been attracting an increasing number of investors from the entertainment space.
For example, he says Verdine White, one of the founding members of the great musical band, Earth, Wind and Fire has joined the ownership group of Cape Town Tigers. Other global celebrities in the group include Afrobeat mogul, Mr Eazi, and Paxton Baker, an American businessman, entrepreneur and philanthropist, who has served in the entertainment, music, sports and production industries for over 30 years.
Silverbacks is also into the entertainment industry. It recently invested in an upcoming movie being produced by Forever7, the Nigerian production company that delivered Namaste Wahala, a global Netflix hit that made the Top 10 films chart in a number of countries including in the UK, India and the USA.
One industry that has struggled to really take off in Africa is the media. Sagna, however, calls it the “greatest tool for business development in the history of man” and it’s also very much in his cross-hairs.
The firm is invested in a few notable media properties and recently signed a partnership with the UAE-based Beacon Media, which was founded by the legendary Deepak Chopra and the business mogul Manoj Narender Madnani.
On a fully-owned proprietary basis, Silverbacks recently launched its own podcast show called Silverbacks Valley. The platform features interviews with tech and sports moguls as well as founders of creatives alongside leading investors within the NBA and NFL, amongst others.
In this way. Silverbacks also gives a voice to its portfolio companies, and aims to stake a claim for a slice of the immensely valuable media industry pie.
Sagna says his company is closing the loop by investing in luxury brands. Its first investment is in Armando Cabral, a high-end fashion brand started by a former model originally from Guinea-Bissau. It has stores in New York including Saks, 5th Avenue. Nigerian Afropop sensation, Burna Boy is a fan.
There is a thread that runs through the investment bets that Silverbacks is making. They are bets on intangible values that nevertheless wield immense sway. Sagna talks about brands that have been around for more than 100 years and retain the loyalty of consumers, beyond the physical quality of the product or service.
“The business of luxury is very similar to the business of sports,” he argues. They are first of all, businesses that have acquired a devoted fan base, a base that adores the brand. For example he says, “An African ‘married’ to a British football team even when he has never left the continent; an individual paying $700 for a branded t-shirt while a simple one will cost $7. This is called brand devotion, an attachment yielding immense economic rewards and timeless value.”
The current gap in the diaspora market is to provide culturally relevant luxury products and timeless experiences. This is a truly unique opportunity, he says.
Pick your tunnel and focus
The luxury sector worldwide, he says, is one of the largest and most lucrative. The global market for luxury goods was worth $242.8bn in 2022 and is projected to reach a value of $370bn by 2030.
“Despite all the noise in technology and natural resources, the richest man in 2022 was the CEO of LVMH, Bernard Jean Etienne Arnault, ahead of Elon Musk or Jeff Bezos,” says Sagna. “And therein lies your answer. There are certain sectors and industries that historically maintain their value even as new trends arise.” This is one of the reasons why luxury goods and experiences are part of the company’s portfolio strategy.
The Silverbacks plan is focusing on sectors that work on scarcity and brand devotion. There is a business case to merge tech, sports, entertainment, media, and luxury, so long as you can back up authentic, timeless experiences and maintain brands around powerful storytelling.
“You need to think about these things like you do when you think of an airline. You must prioritise filling up either the economy class or the first class. Once you do that, then the problem of the business class solves itself by default. But first you must pick one single tunnel, then progress.”
Are their investments paying out? “Our tech portfolio has tripled in value over three years,” Sagna says. “Within the tech portfolio we’ve managed to have five exits and the gain from each of these exits is over five times the initial cash invested.”
The next step is to extend these wins to the sports, entertainment, media and luxury sectors. If the company succeeds, and these industries take off as he predicts, it’ll truly cement Africa’s commercial coming of age.
