Nollywood bets on popularity to woo more investors

Stakeholders in Nigeria’s film industry, better known as Nollywood, are optimistic that its popularity is capable of bringing in more investors if hurdles including infrastructure deficit are tackled.

Nollywood, which is valued at $6.4 billion, is by far the most popular movie industry in Africa, but attracting funding from foreign investors continues to be a challenge. But some experts say it could be an opportunity to do things differently.

Streaming giant Netflix, in a recently released report, showed that it invested in South Africa more than five times the amount of money it injected into the Nigerian market from 2016 to 2022. Netflix invested a total of $125 million in South Africa, compared to $23.6 million in Nigeria, although Africa’s most populous nation had more titles (286) than its South African counterpart (186) on the platform.

Read also: Nollywood content outpaces distribution channels

To address this challenge, industry experts have suggested a number of solutions that could make Nollywood more attractive to investors.

Femi Odugbemi, founder and executive producer of Zuri24 Media, said data needs to be more affordable and accessible in order to draw the necessary financial backing from streaming platforms for Nollywood.

“Clearly, we have an infrastructure deficit in terms of data penetration that requires investment outside Nollywood. Of course, we also need data to be cheaper than it currently is because our poverty index is higher. If that’s fixed, more platforms beyond Netflix will be attracted to our market,” Odugbemi said.

Patrick Enaholo, an adjunct lecturer at School of Media and Communication, Pan-Atlantic University, said the disparity has to do with the maturity of each industry, adding that the film industry in South Africa is more advanced and closer to international standards than Nigeria’s.

“Perhaps this has something to do with its longevity; the industry dates back to the 1910s, but I’d also say that it is connected to the number of Oscar-nominated movies and actors from SA. Two films come to mind: ‘District 9’ and ‘Totsi’ (best international feature film way back in 2005),” he said. “The Nigerian industry needs a bit more time and, alongside its attractive local market, will draw more global attention to its quality and to Netflix’s budget.”

The Nigerian government also has a role to play in helping the Nollywood industry become more attractive to foreign investors. For example, in South Africa, the approach the government uses to support the film industry is more focused on direct financial support and international market access.

In March 2021, Netflix and the National Film and Video Foundation (NFVF) announced a partnership worth $762,000 aimed at funding the production of South African films. The NFVF is known to provide funding for film and television productions, international co-productions, and training and development initiatives for emerging filmmakers.

It also offers marketing and distribution support for films and provides access to international markets through its presence at major film festivals around the world.

Other experts say Nollywood’s stakeholders have a role to play in building a well structured industry that would attract investors.

“Nollywood stakeholders need to build strong institutions along and around the entire film value chain. For instance, development-distribution, ancillary services and guilds as well as push for policies such as tax, antitrust, and labour laws which encourage, incentivise and protect film-related businesses,” Deyemi Okanlawon, a Nollywood actor, told BusinessDay.

Okanlawon said that by doing so, it would primarily strengthen and increase the value of the industry and its stakeholders with the resultant effect of attracting investors.

Generating funding for movie production is one of the most difficult steps in movie making, therefore tax incentives have for a long time been a way South Africa has grown its film industry. In 2022, the South African government offered a 25 percent (of Qualifying South African Production Expenditure) filming incentive for foreign film and TV productions shooting on location in the country, with a capital of $2.7 million, and an additional incentive of 5 percent for productions shooting and conducting post-production in the country as well as a 20 percent rebate on post-production and digital animation.

In Nigeria, the government has also made efforts to support the movie industry, but the approach has been more focused on regulation and capacity building than direct financial support.

The National Film and Video Censors Board was established to regulate the film and video industry in Nigeria, ensuring that content is appropriate and in line with cultural and moral values. The Nigerian government also established the Nigerian Film Corporation to support the development of the film industry by providing training and capacity-building programmes for filmmakers as well as facilities for film and television production.

“The enabling economic environment that drives growth in real terms comes from government policies and plans to support and encourage investment in the film industry. Political stability in the country is also part of that. A stable exchange rate is part of that. The tax regime and the tariff regime are part of that. These are steps that indicate to foreign investors that the government prioritises growth in the film sector,” Odugbemi said.

Even though regulations and capacity building have helped the industry to grow, lack of direct funding has proven to be a setback for filmmakers who would like to make movies with visual effects studios and the most sophisticated technologies to make their films more appealing to not just audiences in Nigeria but globally.

Enaholo agrees that tax incentives will help in Nollywood but remains sceptical that it will be effectively implemented as the industry is not as structured as that of South Africa.

“Sounds like the chicken and egg conundrum, right? We need to be more mature to generate more funds but we also need the funds to become more mature! However, I think it’s disingenuous to think that more money will lead to global sales. Netflix is a global platform and I think Netflix has done well for Nollywood but it’s probably too early to clamour for more funds. Perhaps the right quality isn’t there just yet and Nigeria is one high-standard movie away from making the world pay genuine attention,” Enaholo said.

For Okanlawon, tax incentives can’t work as a stand-alone measure to foster industry development.

“Government level intervention in skill acquisition, infrastructure development, international trade agreements, and even direct interventions to monitor and not stifle entrance and operations of local and international streaming platforms are some of the other levels of engagement required,” he said.

Many young talented filmmakers in Nigeria don’t have the financial backing to produce high-quality films that attract big box-office revenue and international collaboration. A filmmaker who chose to remain anonymous has up to three short film projects ongoing but needs financial backing in the range of N3 million to N5 million to get the projects completed and sent to the distributor.

“Nollywood’s expansion has been organic in its essence and building policy structures, and infrastructure to sustain that growth seems clearly the vital next steps,” Odegbemi said.

Experts also cited the high cost of doing business in Nigeria as a setback for foreign investment in Nollywood. Poor infrastructure, lack of security, inflation, multiple taxes, and levies all contribute to the cost of doing business in Nigeria for both local and foreign investors, they said.

“I think in many respects the cost of doing business in Nigeria is still too high for some of the global players who wish to do business here. So there have to be more intentional steps taken to attract direct foreign investment to the entertainment sector through incentives that address these limitations,” Odugbemi said.

Experts also say Nollywood does not get the amount of global visibility it deserves, therefore the need to expand marketing strategies of the industry. Some Nollywood producers are already thinking along this line. For example, Funke Akindele and Toyin Abraham had their 2022 December releases ‘Battle On Buka Street’ and ‘Ijakumo’ screened in cinemas in the United States and the United Kingdom.

‘Battle on Buka Street’ debuted in 11 Regal Cinemas, and despite opening in only 11 locations, the comedy-drama earned $61,000 over the four-day New Year weekend.

“The African diaspora in the US have been underserved and starved of true African content, especially theatrically for the longest time,” Craig Shurn, of Part Two Media, said, adding that investing in marketing campaigns that target international audiences can increase Nollywood’s visibility and attract more investors.

“Nollywood must continue to grow its quality and equip itself to take stronger advantage of global interest in our stories. But it’s a combination of all these that will attract stronger foreign investment into the ecosystem,” Odugbemi said.