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Is the South African music industry underrated on the global scale?
Music from Africa is very special to me because it tells the story of our great continent from east to west and from north to south.
Music from Africa is very special to me because it tells the story of our great continent from east to west and from north to south. Growing up in Nigeria, I was obviously exposed to mostly Nigerian music. However, as I grew older, I began to widen my listening range of music across the African continent, which eventually led me to discover house music from South Africa.
House music from South Africa
House music from South Africa is very different from Nigerian music. From the drums to the vocals and even the dialect, it almost feels like these songs have a bit of folklore that pertains to their culture. The South African music has always been power backed with emotions from the outset of the songs of Mama Africa, Mariam Makeba, to the music and dance of the Ipitombi dancers, who won the hearts of Nigerians during the FESTAC 77; not to mention the Umbqumoti song that was played at every party in the late 1990s.
Busiswa Busi
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One of my favourite songs from South Africa is “Khona” by the group, Mafikizolo and Uhuru. The song was very popular across the African continent in 2012 because of its electrifying beat and its catchy hook, which got people on their feet dancing in excitement. Despite the success of these songs, I always ask this question, Is the South African music industry playing second fiddle to Nigerian and Ghanaian music at the global music landscape?
South African artistes
We are familiar with the likes of Busiswa, Mampintsha, Babes Wodumo, DJ Maphorisa, Black Coffee and host of others for some of their smash hits, which have received airplay in Nigeria and other African countries; however, a lot of artists in this genre do not get as much recognition from the global front, compared to artists from the West African region.
Mampintsha
Setbacks in the industry
Despite this minor setback, S.A house music within the last couple of years has made some significant strides. The movie, “Black Panther,” which broke the box office in 2018 as it brought an African superhero to the big screen for the first time, featured a few South African house music songs in the movie, such as “Wololo” by Babes Wodumo & Mampintsha. In addition, some other South African artists like Sjava had the opportunity to work with the likes of California rappers, Mozzy and Reason, on the official Black Panther album.
Beyonce’s Lion King album, which was released in July 2019 also gave a nudge to the South African house music. The likes of Moonchild Sanelly, who was widely known for the feature on the 2018 smash hit, “Makhe” with DJ Maphorisa, appeared on a track titled “My Power,” which was performed alongside Beyonce and American rapper, Tierra Whack. What is more, the song was written by S.A house artist, Busiswa.
Music is certainly a big deal in the South African market, particularly in the digital music segment. According to Statista.com, revenue in digital music currently amounts to $35 million (2019). This number is expected to grow at an annual rate of 5.2%, which would eventually result to a market value of $43 million by 2023.
As for the music industry in South Africa as a whole, it is growing day by day. According to SME South Africa, the music revenue in the country is projected to be around. R1.7 Billion ($116,158,416.00) by 2021.
With all the above data available, it is clear that music in South Africa is moving towards the right direction. The intellectual property rights protection is implemented in South Africa and it has laws to back the creativity of individuals. The Copyright Act No. 98 of 1978, which gives a person the eligibility to copyright his or her own work provided that the work is original, is just an example of a well set up structure in the South African music scene.
Babes Wodumo
[READ ALSO: The Nigerian Afrobeats Music Industry Gains Global Momentum]
One can only hope that this growth in S. A’s music industry would help take more home-grown artists to the world stage in order to compete with other thriving African artists like Wizkid, Davido, Tiwa Savage and Burna Boy.
South Africa, you are on the right track.
Paul Olele Jnr writes from Washington DC. He is a 2019 graduate of George Washington University and currently works as graduate Media and Research Intern at the Initiative for Global Development.
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Nigerian Breweries leveraging, but stacking cash through rising input costs
The marathon continues for Nigerian Breweries with its 2020 financials.
Humanity might need more booze to survive the increasingly daunting intricacies of life, but Nigerian Breweries 2020 financial statement is proof that even the best can get caught up in the reality of changing business lifecycles.
Nigerian Breweries Plc had floored the market providing both alcoholic and non-alcoholic premium quality beverages across the nation. But with brands like Star lager beer launched as far back as 1949, Gulder lager beer launched in 1970, and even the family-friendly Maltina introduced as far back as 1976, it is only natural that both the old and new generation competition gives them a run for their market share.
Much like other old money companies, Nigerian Breweries has done its bit to remain relevant in the industry from creating new variants of existing favoured brands to paying dividends consistently annually for the past few years. Yet within the same period, the company’s financial statements have been a testament to its streamlined market share and reducing profits. The marathon continues with its 2020 financials. The industry giant may as well be setting itself up for a debt quagmire peradventure its projections do not match the true reality of events.
READ: How COVID-19 has changed Nigeria’s consumer goods & industrial markets –KPMG
2020 financials: A tale of higher costs & larger debts
2020’s unfavourable financial/ business environment led to the increase in the prices of raw materials and disruptions in logistics for many Nigerian-domiciled businesses including Nigerian Breweries. Raw materials and consumables witnessed a 17% increase despite the marginal growth in revenue.
While the group’s 2020 results revealed a 4.35% increase in revenue from N323 billion in the prior year to around N337 billion, these gains were curtailed by a higher-than-par increase in cost of sales which had risen by 13.9%, from the N191.8 billion expended in 2019 to N218.4 billion as its 2020 financials reveal and interest rates going way up.
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The company’s lower operating expenses were not enough to salvage the disruption caused by the raging interest expense following increased charges paid on bank loans and overdraft facilities as well as the significant increase in overall debt. Between 2019 and 2020 alone, long term loans and borrowings increased by 974% from N4.8 billion to as much as N51.8 billion. Even trade and other long term payables increased by 35%.
In its financials, the company noted that it has revolving credit facilities with five Nigerian banks to finance its working capital. The approved limit of the loan with each of the banks range from ₦6 billion to ₦15 billion (total of ₦66 billion) and each of the agreements had been signed in 2016 with a tenor of five years. The Company had also obtained Capital and Working capital finance from the BoI in 2019.
READ: Manufacturing sector in Nigeria and the reality of a “new normal”
It is no news that the company is involved in diversified lease arrangements. Following reclassifications made in 2019 to some of its lease assets, the 2020 asset base also witnessed significant increase in Right of Use Assets which increased by 288%% from N11.1 billion to N42.9 billion. Yet, the fact that in one year, interest expense on Lease Liabilities rose from N19.7 million in 2019 and to a whopping N4.171 billion shows that the company is taking way more debt than its books require.
But what’s it using all the cash for?
Beyond rising material costs, borrowing costs have been huge and the annual interest payment by virtue of these loans make the possibility of higher profits for the company a mirage. That said, the overall increase in total liabilities might not have been such a bad idea if the funds were being used to increase revenue and profits. But having a huge chunk of all that money in cash creates a different kind of challenge. Cash and bank values in its statement of financial position significantly increased by 377% from N6.4 billion in 2019 to N30.4 billion in 2020.
Is the cash being held to mitigate possible challenges of the volatile economy or are they being used to pay dividends? Even at a share price of N52 per share, the company’s price-to-book value sits at 2.5816, testament of its dire overvaluation. Consequently, there is an ardent need for the company to come up with newer ways to attract the wider market and keep its book in the green with a little less external funding.
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Secret behind MTN’s blistering performance
Despite COVID-19 disruptions, MTN Nigeria’s 2020 financials showed marked improvements compared to its 2019-year-end.
