Economic Update

Published 13 Jun 2012

Nigeria’s film industry, the second-largest in the world by volume, is already a prime destination for investment but with a national film fund and major infrastructural projects under consideration, there is potential for further growth.

On May 8, Segun Oyekunle, managing director of the Abuja Film Village International, a public-private partnership with the Federal Capital Territory Administration, announced that plans were under way to develop a film village in Abuja.

Set on 5000 ha of land, the village would feature a studio for film and television and be outfitted with equipment for filmmaking, music production and photography. It would also host a shopping centre, polo club and a university for film, television and radio. The project’s concept design is pending approval from the Federal Executive Council (FEC).

Also under development is the Plateau Film City, located on 300 ha of hills, valleys and forests in the Miango district of Plateau state. When completed, this project, facilitated by the Nigeria Film Corporation and the Plateau state government, will feature film production facilities, upmarket hotels, residential estates and leisure facilities, such as shopping malls.

Further support for Nollywood, as Nigeria’s film industry is often referred to, may come in the form of a national fund to boost the growth of the domestic film industry. Labaran Maku, the minister of information, announced plans to set up the fund at the opening of the 2012 Zuma Film Festival held in May. He noted that President Goodluck Jonathan had already set aside $200m for the sector, pending further measures that would allow artists to access it. The FEC is currently reviewing the proposal.

Such a fund would broaden access to financing for low-budget filmmakers. According to Maku, “The conditions for a specific film fund would be easier than taking money directly from commercial banks, which is a bit more expensive and the conditions often not easy for small-scale producers in this sector.”

In addition to developing the sector domestically, initiatives are in the works to promote the country abroad. The Bank of Industry (BOI), for example, has finalised plans to promote Nigeria’s digital media, including the film industry, at the 2012 London Olympics. This is part of the BOI’s long-term plans to promote the country’s creative industries.

Given the rapid growth of Nigeria’s film sector, it is no surprise that the government is promoting it so heavily. Annual revenue for Nollywood is estimated to be around $590m. On average, nearly 600 films are produced annually, with each selling nearly 50,000 copies. In 2011, around 2000 movies were produced in Nigeria, averaging roughly 40 a week. This high production volume can be attributed to the fact that Nollywood films are generally low budget, with each film taking on average of 10 days to complete and costing between $10,000 and $15,000.

With the right incentives to encourage growth, the sector is thus poised to contribute to Nigeria’s overall economy. Indeed, in 2010 the World Bank identified Nollywood as a leading non-oil sector and included it as part of its Growth and Employment in States (GEMS) project. As part of GEMS, the industry received $20m in funds from the World Bank to aid sector growth and boost employment.

The sector has a number of challenges to overcome, however. For example, low cinema patronage is causing the industry to lose 50% of its revenues, according to Kene Mkparu, managing director of Film House Cinemas. This is particularly harmful to the industry in terms of employment, he added. The industry is the country’s second-largest employer, following agriculture, providing jobs for nearly 1m Nigerians.

Another struggle for Nollywood is addressing piracy. The majority of films are made on video CDs, a less expensive alternative to DVDs, and sold on the street for a few dollars. Many of them are then copied and sold again.

“Piracy is not a problem with the system,” Jade Miller, an academic at Tulane University who has researched Nollywood’s economics, told The New York Times earlier this year. “It is the system, essentially.”

Despite these challenges, the outlook for Nollywood remains bright. As a major contributor to employment and exports, Nigeria’s film industry will also help diversify the economy away from hydrocarbons. With major infrastructural projects being discussed, high demand for training and equipment, and strong government support for the industry, the opportunities for investment are vast.