Is Binance’s AFCON Deal the Starting Pistol in Africa?

In January, Binance emerged as the exclusive cryptocurrency and blockchain sponsor of the Africa Cup of Nations (AFCON) 2021 tournaments, the biggest football contest in Africa.

TotalEnergies AFCON 2021, which was broadcast live in more than 160 countries and attracted an audience of over 300 million people, was won by Senegal in February after several stages of matches played in five African cities.

This move from Binance, which recently signed a five-year sponsorship deal with the Argentine Football Association, is probably the first large-scale attempt by a cryptocurrency exchange to ride on the back of Africa’s most popular sport, football, to penetrate the continent.

“Football is super important as it is a unifying factor on the entire continent. Lots of people on the continent are either active or passive football fans, making the sport an excellent way to target people across the continent,” Carine Dikambi, Francophone Africa Lead at Binance told Finance Magnates.

“As such, people who would otherwise be unsure about the legitimacy of crypto are able to see crypto in a different light,” she added.

Matt House, the Chief Executive Officer of SportQuake, a sports marketing agency specializing in football sponsorship, noted that "Africa is sports mad and within this, football is number 1 by a mile!"

"To give you some context, Premier League, Champions League and other top European football competitions delivered cumulative viewership of two billion views across Africa in 2020/2021. This is before we add in reach of domestic African football," House added.

The Rise of Crypto Sports Sponsorship

The origin of crypto sports sponsorship has been traced back to 2014 when US-headquartered Bitcoin payment service provider, BitPay, signed a sponsorship deal with ESPN Events, an American multinational sporting event promoter owned by ESPN Inc.

Restrictions on crypto promotions by major networks such as Facebook and Google due to fear of scams and frauds probably contributed a great deal to the rise of crypto sports sponsorships as brands seek alternatives to gain more customers.

Since 2014, the sports world has been seeing multi-million dollar crypto sports sponsorship deals, from football, esports, and basketball to hockey, car racing, and wrestling.

In fact, the International Federation of Association Football (FIFA), the world football governing body, recently unveiled Singapore-based cryptocurrency exchange, Crypto.com, as a sponsor for the FIFA World Cup Qatar 2022.

This marriage between cryptocurrency and sports has also led to increased interest in the creation of club-based digital or fan tokens.

Recent Crypto Sports Deals

Europe and the US have seen some of the biggest sponsorship deals from the crypto world.

Last year, the Staples Centre, will houses some of the biggest sports teams in the US including football and hockey teams, was renamed the Crypto.com Arena.

The renaming happened after Crypto.com signed a 20-year $700 million deal for naming rights to the iconic sports arena.

Still in the US, the exchange was recently announced as official title partner of the Formula 1 Crypto.com Miami Grand Prix.

It also recently signed a deal reportedly worth $175 million with the Ultimate Fighting Championship, an American mixed martial arts promotion company.

Outside the US, Crypto.com has expanded its presence to Australia with a multi-year collaboration with the Adelaide Football Club.

Additionally, Coinbase, the largest cryptocurrency exchange by trading volume in the US, brokered a deal with the US National Basketball Association on the eve of its 75^th anniversary, to leverage on the association’s platforms and leagues to attract exposure to its crypto products from sports lovers.

Around Mid-May this year, Coinbase also announced its partnership with Seattle Storm, an American professional basketball team.

Many top football clubs in Europe including Manchester City, Manchester United, Wolverhampton Wanderers (or just Wolves), Arsenal, Barcelona and Paris Saint-Germain have also entered various crypto sponsorship deals with exchanges and blockchain companies.

Meanwhile, Binance’s deal with AFCON is Africa's biggest crypto sports sponsorship yet—and probably the first major crypto sports deal from a crypto exchange or blockchain company.

What impact will it have on a continent struggling to come to terms with cryptocurrencies?

Will the deal be the starting pistol for other crypto sports sponsors to target Africa?

How far can crypto sports sponsorship go in the face of the continent's multi-faceted crypto regulations?

Africa: Fighting for Legitimacy

Africa currently has a divided cryptocurrency industry.

While a few countries like South Africa have sanctioned the use of cryptocurrencies, the majority such as Nigeria have placed implicit bans on them, and four countries—Algeria, Egypt, Morocco, and Tunisia—have placed absolute bans on them.

However, there are also 17 countries in the continent that are still uncertain about how to regulate cryptocurrencies, according to the Africa Blockchain Report 2021.

Despite all these, cryptocurrency adoption is on the rise in Africa.

According to Chainalysis, cryptocurrency adoption in Africa grew by 1200% between July 2020 and July 2021, making the continent one of the fastest adoption destinations in the world.

Placed side by side—a divided cryptocurrency regulatory environment and a continent see rising cryptocurrency adoption—experts believe Binance’s move is a needed extra but with its own limit.

“Partnerships like this can be fruitful, but it's vital to consider that Africa has some incredible momentum going when it comes to adopting cryptocurrency already,” explained Adam Tracey, Operations Lead at LocalCoinSwap.

Tracey further explained that while sport is an incredible tool for increasing brand awareness, “it's more the potential for increasing dialogue while normalizing participation in the cryptocurrency space that can be the most significant benefit.”

“It's one thing to see a sport drink promoted and take the plunge into giving it a go when you see it on the shelves at the store. It's another to dive into cryptocurrency without additional resources or knowledge,” Tracey told Finance Magnates.

Dikambi reiterated this point, noting that “a big challenge that can limit the contribution of sports to the adoption of cryptocurrencies is a lack of understanding of the use cases as well as the underlying technology.”

“This means that despite the increased awareness, there is still the need to educate the new people who have been reached by these collaborations,” Dikambi said.

House, however, posited that Binance's deal with AFCON should be seen as "one early play in a much larger and longer-term game and not in isolation."

"This is just the beginning. Football sponsorship provides brand marketing teams with a platform to achieve huge launch impact and ongoing dialogue across key markets through premium TV, digital and social," the SportQuake CEO told Finance Magnates.

Africa: Will Crypto Sports Sponsorship Rise or Fall?

House noted that spending by cryptocurrency exchanges and blockchain networks are the fastest growing sponsorship categories in sports.

"To give you some context, over the past 12 months, these brands have spent a combined $716m (up from $50m per annum) – a 14 times year-on-year increase propelling them past the historically largest spending category of financial services ($650m) to make them the top spending category across global sport."

The CEO, however, believes that the largest challenges to continued, sustained spend and crypto adoption in Africa can be seen from a macro and micro point of view.

House explained, "Firstly, macroeconomic: Are we going into a full-on global recession and, if so, when?

"Secondly, microeconomic: Will the crypto correction that we have seen over the past six months turn into a full-on crypto crash and full re-evaluation of the crypto sector?

"Finally, regulation: Will there be higher levels of regulation on crypto specifically around advertising and promotion of crypto including football sponsorship?

"Depending on how you view these questions, football and sports marketing will either become a bigger or smaller thing for cryptocurrency and blockchain ecosystems and networks."

With the AFCON 2021 done and dusted, it’s left to see if Binance’s deal will truly be the starting pistol for Africa.