Burna Boy, the Grammy Award-winning Nigerian artist, took to the stage in San Francisco late last September. He wasn’t playing in front of a sold-out stadium like he usually does, but he was making his debut as the worldwide brand ambassador for Chipper Cash, a pan-African payments innovation.
The skillfully prepared product launch event included footage from the star’s music videos, his new Chipper Cash TV advertisements, and a panel with the startup’s co-founders. The event was streamed to Burna Boy’s millions of followers on Instagram Live.
It’s not just fintech, though, since other celebrities are making big deals with various industries as well.
In Nigeria, just about anything can be sold if you have the right celebrity behind it. Nigeria’s most successful marketing campaigns have all relied on a big name and recognizable face to make waves, which often works well for the brands in question.
Some of the well-known celebrity endorsements from recent times have included online casinos, which have recruited people like YouTuber Mark Angel, host of Big Brother Naija Ebuka Obi-Uchedu, and even one of the most successful Nigerian artists of all time, Don Jazzy; telecom brands like MTN and Glo have paid a lot of money to a long list of Nigerian stars, including Burna Boy (when he was on the come-up), Wizkid, Davido, and more.
The list goes on and includes everything from slimming tea to mattresses. If people love a celebrity, you can use them to sell just about anything.
That brings us to the latest and most lucrative wave of endorsements in Nigeria: fintech.
Fintech takes center stage
A Nigerian company raising $10 million was unusual ten years ago, but now, the country boasts fintech unicorns with valuations equal to those of its banks.
According to Africa: The Big Deal, a pan-African financing tracker, investors (including global behemoths SoftBank and Tiger Global) invested $1.37 billion in Nigerian startups in 2021.
Most of that capital is in US dollar-denominated funds, offering corporations massive financial clout in a country grappling with currency depreciation.
To tempt clients in Nigeria’s vast but increasingly saturated marketplaces, these well-funded firms are spending heavily on celebrity endorsements, sponsorships, and cash gifts.
How it started vs. how it’s going
It’s only been about three years since Paystack, a payments firm based in Lagos, erected its first billboard in Nigeria’s commercial city. Today, Kuda Bank and Chipper Cash billboards and street advertisements may be seen for kilometers along Lagos’ bustling highways.
Marketplace and educational tech businesses such as Autochek, Glovo, and uLesson are also investing. Still, fintech firms spend quite liberally since they are among the most successful, deep-pocketed members of the country’s startup ecosystem.
Stripe paid upwards of $200 million for Paystack in 2020; a recent financing round valued Kuda Bank at $500 million; Chipper Cash’s November 2021 series C raised its worth to over $2 billion. To justify such high valuations, fintech businesses must demonstrate growth, which requires significant investments in gaining new customers.
Celebrity endorsers, who often have enormous social media fanbases, are an inexpensive way to create trust. According to some entertainment industry sources, the main transactions involving Wizkid and Burna Boy would have been worth close to $1 million for each artist—a large sum in Nigeria.
The remarkable success of marketing on reality TV
Apart from focusing on musicians, given their global reach, these companies are also targeting the local market through aggressive campaigns using the Big Brother Naija platform.
When it airs, often for up to 90 days beginning in July, the show draws millions of people to Africa’s largest pay TV operator MultiChoice, which has about 21 million monthly members. For the previous three seasons, Big Brother Naija’s top marketers and sponsors have been technology businesses, online casinos, and gambling operations.
According to sources familiar with the negotiations, Abeg, a social payments firm bought by PiggyTech Global, trumped Kuda Bank and other competitors to become the main sponsor for the sixth season of Big Brother Naija last year forking up $2 million for two seasons.
The company reported that while the program aired between July and October 2021, its app grew from 20,000 to over 2 million subscribers.
A year before that, Kuda Bank trebled its client base to surpass the 600,000 mark, thanks to the show’s success.
How sustainable is all of this?
Short answer? Not very!
Although the digital boom has benefited the advertising business, several industry observers are skeptical that startups’ marketing efforts are sustainable.
Overblown marketing spending raises concerns about fintech’s client acquisition costs in a challenging climate where the average household income is low and economic growth has been weak for the previous seven years, averaging approximately 2% per year.
Unemployment has risen from roughly 9.71% in 2015 to about 33% in 2021. Calculating a consumer’s lifetime value is sometimes based on formulas from the West, which may not always apply to Nigeria.
Making the value proposition is getting more challenging, especially in a struggling economy, as corporations seek to expand market share by offering free stuff