In 1992 a movie about the occult titled Living in Bondage was released on video and became the first major success of the Nigerian film industry. Since then, Nigerian cinema has taken off, as filmmakers have developed innovative methods of making motion pictures. This has especially been the case in recent years, as digital cameras have enabled filmmakers to produce movies much more efficiently than in the days of film, with post-production tasks becoming far less tedious thanks to the utilisation of basic computer programs to edit movies.

PROMISE BRINGS FUNDING: Nigeria’s film industry, or Nollywood as it is known, is the world’s third most profitable and second-largest in terms of number of films produced. In 2011, around 2000 movies were produced in Nigeria, a pace of roughly 40 per week. By comparison, at the start of the decade only a few hundred movies were being made annually. The sector’s exponential growth comes on the back of minimalist production costs and timelines. A typical Nollywood film has a budget of as little as $10,000, and is shot in about 10 days with a production crew of as few as 10 people. Approximately 90% of Nollywood films go directly to DVD for retail sale, as this is the favoured means for viewing movies in the country. Although exact figures are elusive, estimates have the cinema industry generating between $250m and $600m per year, earnings that have caught the eye of domestic and foreign investors. 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 bank to aid sector growth.

The government has been quick to acknowledge the potential of the industry as well. In May 2012 a public-private partnership was announced between Abuja Film Village International and the Federal Capital Territory Administration (FCTA) in an bid to develop a state-of-the-art film village in the country’s capital. The mixed-use site in Abuja is set to span around 5000 ha and will feature a television and film studio equipped with all the modern technologies necessary for producing quality content, including pre- and post-production facilities. In addition to these, the village will have a film school and shopping centre. The FCTA’s investment vehicle, the Abuja Investments Company, holds a 50% stake in the project alongside the Kohath Investment Group, a Nigerian-owned conglomerate.

The FCT is not the only region that aims to garner a larger share of the potential boon from expanding film production. Plateau State has embarked on a similar, though much smaller project, allotting some 300 ha for Plateau Film City, which will house production facilities as well as restaurants and hotels, while Ekiti State has also begun discussing the feasibility of a similar proposal.

The impressive success of Nollywood is a testament to the ample talent in the country’s film industry, which dwarfs all continental competitors. As director and producer Sonny McDon-W told OBG, “We’ve been able to conquer Africa in the motion picture business because we developed very effective and efficient processes of filmmaking. Among African film industries, it is only in Nollywood where you can become an international star.” Indeed, the popularity of Nigerian cinema is widespread across Africa, parts of Asia and the Caribbean.

OBSTACLES: There are crucial challenges that remain, however. Distribution is perhaps the most salient obstacle, not only for aspiring directors hoping to reach a larger audience, but also producers that want a guaranteed return. The vast majority of films go directly to DVD or video CDs, sold on the street at places such as the Alaba International Market in Lagos, where vendor stalls and carts are piled high with discs. Although production costs are low, with DVDs burned for as little as $0.20, high wholesale prices for the films themselves mean retailers have to compensate with volume – sometimes needing to sell over 100,000 copies to ensure a profit.

PIRATE SALES: This approach, while ensuring accessibility for the broader population, also leads to low cinema attendance – an issue for the handful of modern movie theatres in the country. As well as reducing ticket sales, this makes piracy of films commonplace, as movies can be easily copied from the discs and sold on the street at a lower price than their retail value. It has been estimated that as much as 50% of the industry’s profits are lost to piracy and some forecasts place the sale of illegal discs to legitimate ones as high as five to one. In response, the World Bank announced in January 2012 that it would contribute $40m to combat piracy, protect copyrights and establish a Nigerian Film Institute.

ONLINE SHOWING: As in other countries, piracy online is a problem, with movies being illegally replicated and transferred. However, that has not dissuaded legal distributors from moving online, where they can expand access within Nigeria and also tap into markets abroad. Firms such as Iroko Partners – which thanks to an $8m round of private equity funding has been able to build up a library of more than 5000 films and a customer subscriber base of more than 500,000, the vast majority of whom are outside of the country – have seen a huge increase in interest domestically as broadband penetration improves, but still grapple with pirate operators.

Part of the challenge stems from the fragmented nature of the filmmaking industry. As the clout of Hollywood studios in intellectual property debates demonstrates, consolidation and a united front can help dramatically improve the lobbying power of a given sector. It is estimated that Nigeria has a minimum of 500 dedicated production houses, excluding self-financed projects by wealthier patrons, which means as a result that broader industry standards and codes of conduct are not only tough to enforce, they are lacking completely. Since 2006, draft legislation for the establishment of the Motion Picture Practitioners Council of Nigeria (MOPICON) has been circulating, with the potential to provide a framework for a broader overhaul of the sector, but there has been little progress in the intervening six years and the enabling laws have yet to be passed.

FILM FUND: Discussions have been ongoing on the question of how the federal government can best assist the film industry. One possibility is the establishment of a national fund from which small budget filmmakers could draw to help finance their movies. Currently, many filmmakers must rely on financing from commercial banks, which are frequently reluctant to fund motion picture projects. Even when financing is made available, it tends to come with high rates of interest. Further support 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 set aside $200m for the sector, pending measures that would allow artists access. The Federal Executive Council is 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 are often not easy for small-scale producers in this sector.” Beyond this, Nigeria’s Bank of Industry adopted a plan to promote Nollywood at the 2012 Olympic Games in London. Nollywood has some ways to go before it catches up with India’s Bollywood, where film production values have risen past $20m and annual revenues regularly reach $1.3bn. However, if the industry is able to better streamline operations and improve coordination among production houses and distributors – and reduce illegal activity – the demand both at home and abroad means that both the medium-term and long-term forecasts are rosy.