Friday, Aug 11, 2017 10:05AM/ FBNQuest Research
creative industries (arts and entertainment) are slowly breaking new ground.
New trends have led us to consider it potentially as a sound private
According to the national accounts for Q1 2017, the entertainment industry grew by 12% y/y. However, we emphasize that this is from a very low base as the sector accounts for just 0.3% of total GDP. Nollywood is said to be the second largest employer in Nigeria after agriculture.
The Nigerian film industry (Nollywood) is recognised as the second
largest globally and has been identified as a priority sector in the FGN’s Economic
Recovery and Growth Plan 2017-2020. The industry is projected to generate
US$1bn from export revenue over the next three years.
The success of the industry hinges partly on the development of cinemas
and multiple distribution platforms.
We understand that the industry produces 50 films per week. Given the
high frequency of production, the quality and content of most of these movies
are variable. However, from a trend perspective, there has been increased
demand at cinemas for local films which take after global standards.
In 2015 one such movie grossed over N95m from cinema ticket sales.
However, last year another movie, which captured the culture of Nigerian
weddings, broke that record by grossing over N450m.
The FGN has granted most segments within the creative industries
including Nollywood conditional access to pioneer status incentives (Good
Morning Nigeria, 10 August 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 could be extended
by two additional years.
As with most sectors across the economy, poor access to finance poses as
an obstacle to sustained growth across the film industry’s value chain. The
federal ministry of information and culture recently created a US$1m venture
capital fund to assist with better access to finance for stakeholders within
The Bank of Industry has launched the N1bn (US$3.3m at the official
rate) Nollyfund to support film makers.
Generally, the film industry has made significant strides. On a macro
note, it has engaged the youth population and, as such, generated jobs.
Furthermore, we believe that increased investment within the sector would have a
significant impact on GDP growth.