Lights, Camera, Action


Economic News

22 Jul 2010
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On April 17, Nigeria's Ministry of Information and Communication launched its rebranding campaign for the Federal Republic by announcing a new logo and slogan, "Nigeria: Good People, Great Nation", in a bid to increase awareness of Nigeria's cultural offerings . One industry in particular is playing a crucial role in this promotional push: the extremely popular Nigerian film industry, Nollywood.

During the launch conference in Abuja, Nigeria's minister of information and communication, Dora Akunyili, emphasised the need to involve Nollywood in the rebranding effort. While creative industries may not immediately seem like a key player in encouraging economic development in Nigeria, Nollywood and its associated cultural sectors constitute a significant axis of Nigeria's Poverty Reduction Strategy Paper.

Since the release of Nigeria's first film production in 1993, "Living in Bondage", by producer Kenneth Nnebue, the industry has grown rapidly. The Nigerian Film Corporation (NFC), the public body charged with developing the sector, estimates that the industry grew by 20% in 2008, and contributed over $450m to Nigeria's economy. In addition to the voracious appetite of regional consumers for locally-produced films, the industry also benefits from cost-competitiveness. The overhead for producing a Nigerian film remains low, with cost estimates of between $10,000 and $300,000 per movie, according to the NFC. The average returns on global sales, which reach up to 120,000 viewers per movie for what the NFC calls a "well distributed and marketed" film, are around $5m. The National Film and Video Censors Board (NFVCB) approved 1200 Nigerian films in 2008, a production rate of more than 20 movies a week.

The film industry has benefitted from intensive government support across a variety of distribution mediums. The Nigerian Broadcasting Commission, for example, has recently banned the airing of foreign soap operas on primetime television, a move widely interpreted as a means of promoting Nigerian content on the small screen. This ban has affected some 400 hours of programming every day, according to Kanayo O Kanayo, a Nigerian actor and advocate of the ban.

Demand for Nigerian films is evident for pay-TV operators as well, companies that are traditionally focused on the import of foreign shows based on exclusivity agreements.

"As the largest pay-TV operator in Nigeria, we are looking at ways of including more local content in our broadcast schedule," Joseph Hundah, the managing director of MultiChoice Nigeria, a subsidiary of South Africa's pay-TV, told OBG. "However, it tends to be more straightforward to source foreign shows since they are relatively cheaper than local shows. Nevertheless, local shows have a wider appeal among audiences, which often justifies the investment." MultiChoice's DStv brand has now devoted an entire channel to Nollywood films.

The industry is also seeing a dramatic increase in production capacity, which is being expanded through two ambitious developments. The NFC recently acquired 3000 ha of land from the Plateau State government for the development of "Plateau Film City", an integrated mixed-use development. The infrastructure will include film production centres, radio and TV studios, a housing estate, five-star hotel, office blocks and supporting commercial developments. The project is expected to create 10,000 jobs and the state government had already invested N500m ($3.3m) in 2008.

The governor of Lagos State also announced in September 2008 the signing of a memorandum of understanding (MoU) for the construction of a $5bn film village in Badagry, on the outskirts of Lagos. The project is to include television, film and audio production facilities, as well as the Lagos Film and Television Academy. However, land rights issues have risen to the fore and must be resolved, while details of the MoU remain unclear.

Studio Tinapa, the country's most modern production studio, has already opened as part of the Calabar Free Zone in Cross Rivers State. US-based company Dream Entertainment and Israeli Meimad Studios are technical partners through a joint venture called Dreams Entertainment Nigeria. The $28m project is funded by the federal government and Dream Entertainment.
Still, in spite of the multibillion investments and government support, Nollywood still grapples with a few significant obstacles, including funding and distribution. Banks and traditional sources of finance have tended to shy away from financing film production, citing poor intellectual property protection and the informal distribution system. The lack of financing and rise in piracy directly impact the international influence of Nollywood films, for although Nigeria's film industry is the third largest in the world after Hollywood (the US) and Bollywood (India) by value, its share of the $200bn global market stands at a mere 5%.

As a result, the federal government set up the $40m Film Development Fund in 2006, managed by the NFC and the Small and Medium Scale Enterprise Development Agency of Nigeria, to facilitate access to finance for serious producers, while the NFCVB has begun to formalise the national distribution system, by issuing 84 licences to retail vendors and establishing a system of central clearing houses for wholesale distribution.

An added difficulty for film producers is the unique broadcasting structure in Nigeria. Whereas television channels in other countries usually raise funds from sponsorship, Nigerian television channels sell airtime to producers, who are expected to raise sponsorship to pay the broadcasting fees. As Nigerian television channels have moved to satellite diffusion, their rates have increased. For example, average airtime rates on Africa Independent Television have risen from N1m-1.5m ($6685-10,000) to N4m ($26,742) per hour since they began broadcasting on satellite.

Still in spite of the variety of barriers budding filmmakers face in Nollywood, the sector's potential is apparent to investors. With government backing and increasing returns, Nollywood's star appeal looks set to continue growing over the medium term.

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