Tuesday, April 10, 2018 / 09:59
AM / FBNQuest Research
we turn our attention to Nigeria’s creative sector (arts and entertainment).
The film industry is seen as a dominant player within this sector and has grown
rapidly over the past two decades. Based on industry sources, an average of 50
films are released on a weekly basis and demand for Nollywood movies extends
well beyond Nigeria. We understand that the film industry is one of the
country’s largest non-oil exports. Furthermore, Nollywood is said to be the
second largest employer in Nigeria after agriculture.
The national accounts from the NBS show
that the entertainment industry grew by 3.5% y/y in Q4 2017. However, we
emphasize that this is from a very low base as the sector accounts for just
0.2% of total GDP.
To support growth within the sector, the
FGN granted most segments within the creative industries including Nollywood
conditional access to pioneer status incentives. These include holidays from
the payment of companies’ income taxes as well as withholding tax on dividends
from pioneer profits for an initial period of three years. This duration can be
extended by two additional years.
Similar to other sectors across the
economy, poor access to finance limits sustained growth across the film
industry’s value chain. In H2 2017 it was widely reported that the FGN provided
a N1.8bn (US$5.9m) grant to support the film industry via the “Project Act
We see the sector gaining more ground in
the near future. There are on-going conversations around partnerships with the
Norwegian and Korean film industries. Recently, Sony Pictures signed a
three-year deal with Nigeria’s leading entertainment network to produce tv
projects for global distribution.
The industry is positioned to become a huge
fx earner via export earnings. However, sizeable investments will be required
to realise this potential.
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