Financing Sports in Nigeria through the National Lottery

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Financial Services, Technology, and Automotive Industry to Spend $14.1bn on Sports Sponsorships in 2020
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Alternative ways to finance Sports Development.

With dwindling government revenue, the time has come to seek alternative sources to fund Sports Development in Nigeria. 

Emeka Chinonso Okafor

Introduction

Sports performance and achievements have been the avenue through which great nations of the world exhibit their supremacy over others (MOHAMMED 2017).  Sports provide a touchstone for understanding how people live, work, think and play, and serve as a barometer of a nation’s progress and civilization.

A country’s sporting performance in local and international competitions plays a vital role in fostering nationhood at home and projecting soft power overseas.  As part of a diplomatic strategy, sporting performance improves and positively maintains a country’s reputation (FA 1999).

Financial Services, Technology, and Automotive Industry to Spend $14.1bn on Sports Sponsorships in 2020
Photo by Sandro Schuh on Unsplash

In October 2012, former President Goodluck E. Jonathan convened a strategy retreat to analyse the reasons for Nigeria’s abysmal performance at the 2012 Olympic Games in London. The retreat identified insufficient finance as the main impediment to the systematic development of Nigeria’s sporting performance.

The retreat set out a strategy to address the funding gap and recognized the National Lottery as a primary instrument to generate the necessary financial resources.  At the end of the retreat, participants agreed that a review of Nigeria’s sports funding is needed.

The two most prominent choices were total government funding (or the China model) and private sector funding (or the U.S. model). Elsewhere there are various combinations of public and private sector funding, such as in the United Kingdom, South Africa, and several other countries.

The government of Nigeria engaged Nextier to advise on revitalising the national lottery as a source of enhanced sports funding in Nigeria.  This essay highlights the project’s key findings, which are still relevant today, almost a decade later.

Sports Development

Sports development refers to the gradual increase, attainment, and advancement of sport from low-level strata to a higher level or strata with due cognizance and consideration of the indices that enhance the realisation and actualisation of sports development (MOHAMMED 2017).

Many people see sports development as a way to get more people into sports, but that perception negates the other non-sport objective role that sports achieve. Hylton and Bramham (Hylton and Bramham 2008) argue that sports development is more accurately a term used to describe policies, processes, and practises that form an integral feature of the work involved in providing sports opportunities and positive sporting experiences.

In Britain, sports development influences everything from hosting the Olympic games to designing and providing exercise classes for the elderly. The appeal of sport development to the governments worldwide is high as sports can help promote social cohesion in multicultural societies like Nigeria.

It can also be an avenue for teeming youths to expel energy and keep them away from vices. Sport development is vital as a source of economic activity by hosting sporting events, constructing sporting venues, and developing sports tourism (Polley 2003).

Any sports administration’s task is to develop sports at both ends of the spectrum: the grassroots and high-performance levels.

A sports manager at the micro-level (clubs, municipal and state teams) must ensure sufficient recruitment of participants and provide programs that enable participants to flourish and prepare outstanding participants for representation at the next level up.

A government sports agency at the national level will be concerned with the total participation nationally in sport, the pathways that may assist those participants with talent and ambition to rise, and the opportunities provided to the highest echelon of participants to compete in the international arena.

There are key sport development strategies that need to be present at all sports administration levels, such as coaches’ education, recruitment of participants, knowledge management, athlete development programs, forming partnerships with other organisations, and organizing events (Isaac n.d.).

Successful sports development depends mainly on effective collaboration and networking with a wide range of community groups, service providers, facility operators, national governing bodies, local authorities, and voluntary groups. Those engaging in sports development are in the business of devising better and more effective ways of promoting interest, participation & performance in sport.

Funding Sports

With adequate, sustainable, and properly managed funding, Nigeria’s sporting performance can be significantly improved.  A thesis by Samuel J. Albert showed a statistically significant relationship between athletics expenditures and sports teams’ success at National Collegiate Athletic Association (NCAA) institutions in the United States (Albert 2006).

With few exceptions, teams with the most significant median expenditure recorded the highest national success levels and vice versa.  Another writer reported similar findings for the overall athletic program, identifying that the amount spent on the various programmes accounted for most of the differences in athletic success among NCAA Division I athletic departments (Philip 2003).

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In 2012, Nigeria’s National Sports Council’s “Strategic Sports Development Plan” estimated that an investment of about ₦30 billion (about $200 million) would be needed to redirect the bulk of sports spending away from sports marketing to sports development.

The plan recommended that about 74 percent of the proposed budget be used to prepare for international competitions and offshore and onshore training. The funds’ balance should be used to develop and upgrade facilities, procure equipment and services, train coaches, organise local competitions, and fund sports management and administration.

Sports have become progressively capital intensive.  Yet, in Nigeria, the public sector is almost single-handedly responsible for sports development. This is seen in the provision of sports facilities, programme, personnel, and participation in continental and global competitions.

However, sports development has grown beyond what the government alone can effectively fund.  The vast sums of money needed to carry out local and international sports activities make it imperative for the government to look for funding from private sources.

Funding Sources

The 2012 Presidential Retreat on Sports assessed various funding models and determined that Nigeria should migrate from the predominantly public funding of sports to a mixture of public and private sector sources. This mixed model holds the highest potential for the financial sustainability of the investment necessary for funding sports development in the country.

The retreat identified four potential sources of funding: proceeds from the National Lottery, corporate sponsorships, special taxes on alcohol and tobacco, and government budgetary allocations.  The Presidential Retreat assumed that the National Lottery would deliver the most sustainable, long-term funding for the sports sector.

National Lottery as a significant funding source

In many countries, the proceeds of national lotteries fund various “good causes,” including arts, education, environment, healthcare, heritage, and sports. Funds from national lotteries have been used to finance sports, for example, in the United Kingdom and South Africa, resulting in significant improvements in national sporting performance.

In 2019, the United Kingdom’s National Lottery generated about GBP7.45 billion (US$10.4 billion) in lottery sales. In this same period, 797 tickets won a prize of over fifty thousand pounds, including 364 players who became millionaires.

Since its inception in 1994, the UK National Lottery has generated over GBP35 billion (US$ 45.9 billion) for ‘good causes’ and spent an estimated GBP7 billion (US$ 7.65 billion) directly on sports (Wikipedia n.d.). The UK lottery has created over 3,300 millionaires in the last 18 years (CAMELOT 2013).

Similarly, in 2012 the South Africa National Lottery generated R4.7 billion in Lotto and Powerball tickets (PWC 2013). The South African National Lottery generates about R2 billion (US$ 206 million) a year for good causes’ and spent an estimated R4 billion (US$ 412 million) on sports.

Between 2007 and 2012, Nigeria’s National Lottery generated N2.7 billion for the National Lottery Trust Fund.  Notwithstanding this dismal performance, the National Lottery has the potential to generate significant proceeds for “good causes.”

Nextier analysis indicates that Nigeria could generate about N291 billion a year, with N58 billion going to the National Lottery Trust Fund to fund selected “good causes.”  If the sports sector received a 15 percent allocation, this could provide N8.7 billion annually to support the Strategic Sports Development Plan.

Conclusion

It is admirable that Nigeria occasionally records brilliant successes in competitive sports at various levels. However, this is the tip of the iceberg in the nation’s preferred sports development goals because the accomplishment so far is restricted to a few sports.

Sport policy inconsistency, lack of a clear sports development philosophy, and inadequate funding for the national sport have been the bane of sports in Nigeria (Nigeria 1997).  Addressing these issues will require a willingness to seek pragmatic solutions.

A sustainable funding source (away from government patronage) must be pursued to achieve accelerated sport development in the country.  The National Lottery option is a viable funding choice that has been proven in other climes and is likely to produce the desired result.

Emeka Chinonso Okafor is a Senior Research Analyst at Nextier Advisory and holds an MBA from the Asia School of Business in collaboration with MIT Sloan.