Nollywood, a Potential Growth Driver

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Tuesday, May 25, 2021 / 10:08 AM /  by FBNQuest Research / Header Image Credit: Creators News


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Drawing on data provided by the National Film and Video Censors Board (NFVCB), the National Bureau of Statistics (NBS) has released its maiden report on Nollywood Movies Production. Given that the sector's performance is strongly tied to consumer confidence, trends within the industry can be regarded as a sound indicator of private consumption. The Nigerian film industry is the largest in Africa in terms of value, number of annual films, revenue and popularity. It is also the second-largest film producer globally. The success of the industry hinges partly on the development of cinemas and multiple distribution platforms.

 

Based on the NBS report, Nollywood produced 416 movies in Q1 '21 compared with 903 in Q4 '20 and 407 in Q1 '20. Industry sources suggest that on average, producing a movie in Nigeria costs between USD25,000 and USD70,000. However, despite the successes of most of these movies, Nollywood actors' incomes are low. An A-list actor is likely to receive NGN1.5m (USD3,640) per movie.

 

Nollywood suffers serious piracy issues. A World Bank report estimates that "for every legitimate copy (of a Nigerian film) sold, nine others are pirated". As at 2014, an estimated figure of NGN82 bn was reported to have been lost by Nollywood alone to piracy. There are currently few legal channels for exporting movies, little or no returns go to the filmmakers.

 

The concept of 'New Nollywood' represents a sector of Nollywood that is becoming increasingly formal in the business of filmmaking, a sector that is slowly detaching itself from the industry's informal economy. Filmmakers in this sector produce and distribute their films via the theaters located in shopping malls that attract the middle and upper-class. Thus, assisting with profit maximization.

 

As a purely economic process, gentrification in the film industry requires that the industry be formalized. In Bollywood, the establishment of film academies and corporatization of the industry are steps that transformed the Indian film industry. The recognition of filmmaking as an approved industrial activity in India led to structural changes that have helped to reshape the industry. However, we note that the presence of investors prompted the transformation of the industry.

 

For Nollywood, there is the need for more government support through its regulatory agencies. The role of the government as an enabler is important, as its proactive stance on some of the challenges that have hindered growth within the industry should boost investors' confidence.

 

We recall that the FGN granted most segments within the creative industries including Nollywood conditional access to pioneer status incentives in 2017. 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 may be extended by two additional years.

 

Similar to other sectors, the movie industry value chain was adversely affected by the pandemic. Scores of film shoots were placed on hold or scrapped and professionals across the industry, including make-up artists and technicians among others struggled to earn wages.  However, there has been a considerable pickup in activity following the easing of lockdown restrictions across the country.

 

Strengthening the creative industry (Nollywood inclusive) will assist with easing pressure on Nigeria's unemployment rate as this industry caters largely to the youth population and provides jobs for skilled youths. The industry is positioned to become a huge fx earner via export earnings. However, sizeable investments will be required to realise this.

 

The national accounts from the NBS show that the entertainment industry contracted by -1.1% y/y in Q1 '21. The sector accounts for just 0.3% of total GDP.

 

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