Should patient capital be looking more closely at the music industry in Ghana?

Ghana had its sixth and last coup d’etat in 1981, it restored multiparty democracy in 1992, and next year will hold its seventh consecutive election. The accompanying demographic and economic transformation is captured in the below two charts. Key among them the shift from a least-developed agrarian economy to a largely urban and services-based lower middle income country. If demographic and climatic trends are maintained, in forty years’ time Ghana’s population will be around 60 million (double its current size) and even more heavily based in the urban areas. How will these new millions meet Maslow’s hierarchy of needs? How will they define and organise themselves? Patient capital is thinking about these things. We can see this in recent successful capital raises and investment re Ghanaian agribusiness, renewable energy, human and physical infrastructure.

Source: IMF, World Bank, Songhai Advisory

One wonders if they shouldn’t be looking at the creative industries as well. To quote a friend, ‘in Ghana music is a human right’. That won’t likely change any time soon. Moreover, evidence suggests Ghana produces globally competitive music while commercial opportunities are growing internationally. See, for example, the indicative audience figures for Ghana-based record labels below. Bear in mind that they do not include newer, digital platforms such as Spinlet and Boomplay that are focused on African consumers. Neither does it include figures for domestic live venues (data still in development).

Typical contracts between artists and producers/record labels tend to allow the latter a share of income from live events as well as well music sales. An important feature given suboptimal income from music sales - music is frequently transferred to mp3 or other format rather than on the digital platforms and royalties due abroad are often not collected. Moreover, there are nascent efforts to strengthen property rights e.g. creation of the Creative Arts Mediation Committee in March this year. Patient investors might take inspiration from Universal Music Group’s 2018 investment in Kenya’s AI Records, KupandaCapital’s in MavinRecords and Boomplay’s capital raise earlier this year. Are there potential investees across the Ghanaian ecosystem depicted below in the production companies and further afield ?

For example, Ghana lacks sufficient venue and studio space. The National Theatre auditorium has 1,490 seats in total and there are larger alternatives such as the Trade Fair Centre, Accra International Conference Centre, the Fantasy Dome, various sports stadiums. Additionally, smaller venues such as Alliance Francaise, Republic bar and Plus 233 are well established homes for live music. Nevertheless, the sense is that there is demand for more (crowds of would be attendees at oversubscribed events); particularly at that 2,000 plus seats scale. Security and safety around old stadia are also a concern. All the more so if potential for music tourism implied by the above audience figures is seized fully. What’s more, in developing new event space it might be possible to plan for, monitor, evaluate and replicate specific social impact outcomes. For example, jobs, training and ancillary services. The latter might include legal support around intellectual property, royalties and contractual arrangements more widely, as well as experimentation with new business models and/or technology. Models and technologies that would have applications beyond the music industry.