Digital platforms connect artists, artisans, musicians, and filmmakers with a global audience — driving growth in emerging economies.
© Leika production
Phiona Okumu has always known that African music would appeal to people around the world—she just wasn’t sure how it would reach them. But now that streaming services and digital platforms are delivering African pop to a global audience, Okumu, Spotify’s Head of Music for sub-Saharan Africa, believes that the African music industry is at a tipping point.
“We have artists already signing with the biggest labels in substantial deals, because everyone can see quite clearly that demand is high, and the world is ready” for African pop music, she says.
Sauti Sol, the pop band from Kenya, has gained international attention.
This creative wealth has value beyond each individual deal. As developing nations generate and sell a wide variety of creative products (including films, art, music, fashion, cultural crafts, and computer games and apps), they contribute to the home nation’s gross domestic products, exports, and growth, ultimately boosting development outcomes, according to the United Nations Conference on Trade and Development (UNCTAD).
“The creative economy is recognized now as a tool of sustainable development,” says Marisa Henderson, Chief of the Creative Economy Program at UNCTAD. UNCTAD defines this “creative economy” as the sum of all the parts of the creative industries, including trade, labor, and production. The agency has tracked trade in creative goods and services for close to 20 years and consistently found that the growth rate of creative economy exports outpaces that of other industries.
What’s especially notable now, according to Henderson, is the impact on South-South trade. “South-South trade in creative goods, especially among countries that share languages, helps drive South-South trade in general,” she says.
Digital platforms are fueling this growth by allowing performers, artists, musicians, and others to reach new audiences. Throughout Africa, revenue from digital music streaming is expected to reach $500 million by 2025, up from only $100 million in 2017, according to the World Bank. Music streaming now accounts for more than half the revenue of the global music industry. Worldwide, online video subscriptions hit 1.1 billion in 2020, a 26 percent rise from the previous year.
Creative industries around the world hold similar promise, according to Makhtar Diop, Managing Director of IFC.
“Digitization is bridging the gap between the creative economies of developing countries and world markets,” says Diop. “This is important because the transmission of cultural wealth can mobilize social change and provide jobs for young people.”
What’s creativity worth?
The creative economy is projected to reach a global valuation of $985 billion by 2023 and could represent 10 percent of global GDP before 2030, according to the think tank G20 Insights.
Bollywood, the Mumbai-based engine of India’s film industry, is one of the most widely-recognized examples of a creative sector claiming its place on the world economic stage. India is the world’s largest producer of films—in 2020 the industry was valued at 183 billion Indian rupees (about $2.5 billion)—and although COVID-19 lockdowns have affected box-office returns, video streaming has contributed to record expansion. This growth may even outstrip growth in the Indian economy, one analysis found, predicting that “With an eager and growing workforce and multiplying diaspora overseas, creative content may edge its way up to be India’s greatest export.”
Creative industries’ impact on economic growth and development in emerging markets has been gaining recognition. In 2013, the Inter-American Development Bank (IDB) published one of the first handbooks to help creators, nonprofits, and government agencies navigate commercial opportunities across the arts, heritage, media, and creative services, a sector it christened the “Orange Economy.” And at the 2018 World Conference on Creative Economy, organizers acknowledged “the vast potential and significant contributions of the creative economy to enable global economic growth [and] social and cultural development.”
At Amberry, in Colombo, Sri Lanka, artisans create accessories like these wooden bowties for men. Shifting to digital payment mechanisms during the pandemic helped the shop stay in business.
Most notably, the United Nations designated 2021 as the International Year of the Creative Economy for Sustainable Development. As the year comes to a close, UNCTAD's Henderson says awareness of the creative economy’s potential is gaining momentum. For the first time, G20 leaders have recognized culture and creative industries as drivers for sustainable development and in fostering economic resilience, and G20 ministers of culture have recommended including culture, cultural heritage, and the creative sector in post-pandemic recovery strategies.
“For some developing countries, this is the path out of the pandemic,” Henderson says.
Protecting creative production — and jobs
For other countries, however, a roadblock has emerged: weak, outdated, or unenforceable legal protections for creative content produced and distributed on digital platforms. Though copyright laws and intellectual policy frameworks can safeguard individual contributions to the creative economy as well as nations’ cultural output, “difficult governance issues” threaten progress, McKinsey/World Economic Forum research found. Gaps in policy leadership can lead to piracy and counterfeiting that threaten creative industries at a nascent state of development.
Nigeria’s film industry (known as Nollywood), for example, is one of the fastest-growing creative industries in the world. Nollywood has the potential to become the country’s greatest export, according to PwC, which cites a compound annual growth rate of 19.3 percent from 2018 to 2023. However, piracy and counterfeiting hinder advancement. Because filmmakers receive only a fraction of the total revenue generated by their movies, the industry suffers from chronic underinvestment. That jeopardizes jobs throughout Nollywood, which is the largest private employer in Africa.
But new technologies can tackle some of the most pressing problems. NFTs can help enforce copyright and thwart piracy, helping artists get paid for their work, while mobile money platforms make it easier for consumers anywhere in the world to pay for film, music, and art, according to Bill Sonneborn, Senior Director, Disruptive Technology and Funds at IFC.
“Creator tech can help solve issues of access and inclusion,” Sonneborn says. “When artists are able to develop a local and global audience with corresponding monetization, they become part of a sector that offers direct and indirect employment opportunities and is worthy of investment.” He has noted elsewhere that IFC may be announcing "one or more investments in Africa’s creative sector" in the near future.
For Maiko Magalashvili, a Georgia-based artist who creates jewelry Africa's free trade area has immense potential to deliver inclusive growth that alleviates poverty and minimizes inequality among the continent's 1.3 billion people.
The African Continental Free Trade Area (AfCFTA) is a historical opportunity to capitalize on the continent’s untapped export potential, which amounts to $21.9 billion. But measures are needed to ensure regional and intra-African trade delivers for all.
with cloisonne enamel, a traditional Georgian craft, online shopping and payment platforms have been critical to keeping her business afloat since the pandemic restricted tourism—her shop's usual source of sales. Because of these digital platforms, “My business was not impacted by the pandemic,” she says. In fact, her revenues increased by around 10 to 15 percent because of online outreach, including to new customers in the United States.
A cloisonne enamel ring created by Georgian artist Maiko Magalashvili. Online platforms boosted her business 10 to 15 percent during the pandemic. Photo courtesy: Maiko Magalashvili
Bien-Aimé Baraza, lead singer of the Kenyan band Sauti Sol, also sings the praises of digital technologies. “Right now, with music online, and with distribution being done online, and with digital sales being the dominant way of… getting our revenues from our music, every artist who is working hard and is in a good contract is getting paid,” he says.
Development organizations can support the growth of more, better, and inclusive jobs for young people in the creative industries, says Namita Datta, program manager of Solutions for Youth Employment, a multi-partner working group housed at the World Bank. Raising awareness of creative professions as a viable career path and offering relevant skills training is important because youth unemployment is a crisis in many developing nations, and especially across Africa, where the fast-growing population is outpacing employment opportunities. The continent’s population of 1.2 billion is projected to more than double by 2050. Africa also has the world’s youngest population, with a median age of 25.
“Imagination paired with investment”
Some multilateral institutions are also facilitating training for entrepreneurs in the creative industries and offering connections to world markets, underscoring the link between the creative economy and development.
For example, the African Development Bank created a digital marketplace website and app to help African entrepreneurs in the fashion and textile industries, particularly women and young people, connect to suppliers, buyers, and investors. A World Bank project helps train young people in Jamaica in digital technology to support animation start-ups as well as tech entrepreneurship. And in Latin America, IDB’s Orange Innovation Challenge provided grants for business models that enhance creative and cultural activities with economic and social impact.
Such support is especially necessary now because of the “setbacks” COVID-19 has introduced to the budgets of some government agencies that have traditionally promoted cultural production, says Gunter Axt, the municipal secretary of culture in Porto Alegre, Brazil. Although “the potential of the creative industry in Porto Alegre and throughout Brazil is immense,” COVID-19-related budget cuts have affected his department’s ability to carry out its strategy.
“Culture was one of the economic segments most impacted by the pandemic, perhaps the first to stop and the last to emerge from the crisis,” he says. “There are many jobs that are linked to the creative chain, an environment conducive to income generation and distribution. Money well-invested in culture returns double to the state, in the form of taxes. It's a win-win.”
Targeted support and government policies can help deliver that “win-win” for the global creative economy and the people who power it, Diop said. “The creative industries depend on imagination, and what’s required of development institutions is imagination paired with investment. We see the potential of nations’ creative wealth and the opportunities for commerce and culture to coexist.”
This article was written by Alison Buckholtz and first published on the International Finance Corporation website in December 2021 and re-published with permission.