Developing countries may not be the first thing that comes to mind when the topic of digital trade arises. Exports of products such as music and film are seen to be dominated by wealthy economies. But Rwanda’s creative industries are actively exporting to the international market, showing that digital pathways offer new avenues in the global economy.
That is a key finding of a new International Trade Centre (ITC) report that examines how music and film companies in Rwanda are exploring ways to expand sales at home and abroad. The report Creative Industries in Rwanda: Digital Paths to Global Markets offers case studies that illustrate how micro, small and medium-sized enterprises (MSMEs) in the Rwandan music and film sectors are overcoming challenges and selling digitally to a global market.
‘This report presents original stories from these Rwandans, sharing their experiences in exporting music, films and apps through digital trade,’ said ITC Executive Director Arancha González. ‘It also sheds light on common challenges for small businesses exporting creative products and services in developing countries.’
Rwanda’s film and music artists are targeting specific markets such as its diaspora, and tailoring content and marketing to the developed markets from where they receive most of their revenue.
Worldwide, the creative industries generate $2.25 trillion of revenue and 29.5 million jobs. Music distribution is becoming increasingly digitized – digital sources accounted for half of music royalty collection in 2016. Developing countries’ exports of creative goods more than tripled in 2002–2015, jumping from $84 billion to $265 billion, and least developed countries’ share of exports of personal, cultural and recreational services has surged almost 23% since 2012.
In Rwanda, cultural and creative industries represented 5.3% of the gross domestic product in 2016. This share is above the regional average of 1.1%, and exceeds the roughly 3% share in both the United States and the European Union.
The ITC report illustrates why it is important for creative entrepreneurs exporting music, films and apps from the East African country to adapt content to a global audience. Rwandans want a bigger piece of that global pie, as they see the sector as a motor for jobs and income, and a key to shaping a brand for Rwanda that is dynamic, innovative and powered by youth.
Developed markets offer much higher per-click revenue, and companies often produce or adapt content to cater to consumer tastes in those markets. This presents companies with a tough choice: either produce original content which contributes to cultural diversity, or produce content for business success.
‘That digital content is accessible from everywhere at the same marginal cost does not diminish the need to tailor production and marketing efforts to specific target markets,’ the report concludes. ‘As advertising is often the main source of revenue for digital exporters, it matters where efforts are made, as remuneration varies from market to market. Creating targeted content for specific markets is often more effective than producing general content for a non-specific audience.’
InyaRwanda, EA Champs, Kwetu Film Institute and other Rwandan creative companies address these challenges of size and market limitations by becoming jacks of all trades, expanding their businesses to cover tailored and joint productions, revenue collection for artists, as well as training programmes. ‘Agility is the new power in the dynamic sector of creative business,’ the ITC report notes.
Such firms are using specialized digital platforms, participating in domestic festivals, and exploring new financing options.
The report also identifies common obstacles that MSMEs in Rwanda and other developing countries face when exporting creative products and services. One major challenge is that artists and creators may lack negotiating power with large record companies and online platforms to share revenue fairly. Access to global platforms and their cost is another common challenge.
Among the report’s proposed solutions are tax breaks, grants, incubation programmes, market development assistance and better revenue sharing with artists and creators.
‘These challenges call for policymakers and industry players to take action to ensure inclusive and sustainable development of the creative sector,’ Ms. González said.