New Nollywood: A potential investment catalyst
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 theatres 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, it is pertinent to note that the presence of investors prompted the transformation of the industry.
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 N82 billion 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.
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 the first quarter of 2021 compared with 903 in the previous quarter and 407 in first quarter of 2020. Industry sources suggest that on average, producing a movie in Nigeria costs between $25,000 and $70,000.
The Industry requires 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.
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 which could contribute to ease of unemployment rate in the medium term and subsequent economic growth in the long-run.
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.
Strengthening the creative industry (New 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 forex earner via export earnings in distribution through international platforms. However, sizeable investments will be required to realize this.