Nollywood, Others Grow at 33%, Contributes $6bn to Rebased GDP

Nollywood and the creative art industry is now growing at 33 percent and contributes over $6 billion to the newly rebased Gross Domestic Product (GDP). 
It could be a substantial earner of foreign exchange, boost the external reserves and strengthen the naira, said Bismarck Rewane, Chief Exutive Officer of Financial Derivatives Company Limited.
In fact, he sees exporting Nollywood as an alternative to oil and gas.
The recent rebasing of Nigeria’s GDP has highlighted the promis- ing position of the Nollywood industry. The primary purpose for the rebasing exercise was to reflect more accurately the sectors that were almost non-existent or at their infancy in 1990. These include the music, film industry and telecommunications industry, but to name a few. 
The telecommunications industry may have drawn the most attention during the GDP rebasing exercise; with MTN, Airtel and Globacom, now synonyms for corporate affluence, as realistic products of the rapid development of an industry that was negligible just two decades ago.
Even more impressive is Nigeria’s domination of the African movie industry. In fact, the Nigerian movie industry, also referred to as “Nollywood”, is reported to be the second largest in the world. Only India’s Bollywood releases more movies than the Nigerian movie industry. In terms of revenue, Hollywood remains the World’s most valuable while Nollywood is Africa’s most valuable film industry, generating $590 million annually. Therefore, it is impera- tive that the government continues and improves its support of the industry, recognizing the entertainment industry as not just a strategic medium through which the rest of the world gets a cul- tural education on Africa’s most populous country, but also as a potential source of increased tax revenues and foreign exchange flows.
The movie industry was largely dominated by foreign movies and acts. However, since the 1990s, locally produced and marketed movies have taken prominence as majority of the Nigerian movies audience opt for low-budget movies with captivating stories that are centered around common human values and the West African cultural reality.
Similarly, less than a decade ago Nigerian airwaves were domi- nated by international songs, and most club DJs had to ensure that the majority of tracks on their playlists were foreign records or risk the loss of an audience. MTV hardly played African music and Nigerian artists earned peanuts relative to the amounts they command today. In recent times however, this trend is reversed as club DJs and TV stations have their tracks dominated by local records.
Nollywood is now estimated to be worth about N853.9 billion ($5.1bn), about 1.2 percent of the revised GDP number. An average of 966 films was released per annum between 2005 and 2011. Nigeria’s average release was only surpassed by India’s during the same period as the 1.2bn population country churned out an av- erage release of 1,202 movies.
Nigerian movies remain competitive in their own unique niche but are far from comparable to more conventional movie industries. There persists a huge funding gap between Nigerian film produc- tion and those of the Indian and American markets. This results in the classification of Nigerian movies as semi-professional by global films industry standards, with most productions reflecting an industry of almost vestigial quality. On the other hand, the music industry has witnessed a meteoric rise in recent years as the quality of music and marketing techniques continue to im- prove. The ubiquitous nature of technology employed in the in- dustry and increased Internet penetration has contributed signifi- cantly to this progress, providing relative ease to industry en- trants. Mobile channels like the ‘MTN Callertunez’ platform provide musicians with an added revenue stream. Harrysong recently made millions on commissions that accrued from sales of caller- tunez of his hit song “Mandela”, a dirge celebrating the life of the late African leader. P-square, D’banj, Flavor, 2face Idibia and Davido have become household names, raking in millions for en- tertaining not just Nigerians, but global citizens on and beyond the domestic shore.
On the other hand, music producers command thousands in any currency for their services on songs and earn royalties as these tunes attain higher levels of success. The lucrative nature of the creative arts industry is not limited to musicians and actors alone.
Comedians earn millions putting smiles on the faces of disgruntled Nigerians, giving them a short reprieve from the challenges faced on a daily basis. In addition to engaging their talents, entertainers also exploit their increasing celebrity status, resulting in income from endorsements of companies from a range of industries. The creative arts industry holds the potential to enrich Nigerians of all ages but also provides much needed therapy to help soothe the social woes that plague this developing nation.
“The large number of underemployed youth is a serious threat to the economic and political stability of the country. The median age in Nigeria is 14, and the population continues to grow at a rate close to 3 percent” – John Litwack (Lead Economist for Nigeria, World Bank).
The export potential of Nollywood and the Nigerian creative arts industry seems evident as it ranks amongst the likes of Hollywood and Bollywood – despite a smaller population and significantly less funding, thus making the case for the efficiency of the domestic industry and its comparative advantage over most countries. The quantity of production is not an issue in Nigeria. The United Na- tions Educational, Scientific and Cultural Organization (UNESCO) classified as “very high” movie production levels of 200 or more between 2005 and 2011 with an “average” classification given for production levels between 20 and 79. Nollywood, with more than 900 movies produced on average during the specified period, far surpasses production levels of the majority of industries. How- ever, the relatively poor quality of what is produced highlights the need of significant improvement. Better quality movies would not only improve the perception of the domestic industry and the country’s image, thus attracting foreign investors, but also the revenue accrued from the industry. As a result, tax receipts are expected to increase whilst provisions are made for better-quality jobs for Nigeria’s growing populace. This further corroborates the need for the Nigerian government to do all within its capacity to drive this initiative.
“Nigeria has the potential to be one of the top 15 economies in the world by 2050, fuelled by its population, which would account for about a fifth of Africa’s people” – Jim O’Neil
Nigeria continues to underperform relative to its potential and the severity of this is reflected in its lackluster productivity statistics. More than 60% of Nigerians remain in abject poverty and a con- servative 24% of the country’s labor force remains unemployed. About 50% of the Nigerian population, estimated to be greater than 160m, fall within the ages of 15 and 54 years. The majority of participants in the global movies industry also fall within this age range, highlighting the benefits to be attained if the domestic movies industry were to realize its ambition. Already a major con- tributor to jobs created in recent years, Nollywood remains that “diamond in the rough” that when refined would be worth all in- vested. Now is the ideal time to proceed with the necessary in- vestments. One must not conclude that the government has re- fused to contribute to the success of Nollywood. As a matter of fact, the Nigerian government has been keen on harnessing the potential economic benefits that the industry wields. For example, the Nigerian government, through the Nigerian Export-Import Bank (NEXIM), manages the Nigerian Creative Entertainment In- dustry Stimulation Loan Scheme (NCEILS), an initiative aimed at enabling the entertainment industry to produce more movies, more hit songs and provide more jobs. However, for the industry to inch closer to its potential, the government needs to ramp up its commitments. The number of movies produced may increase, but these have to be of high quality; to achieve this, better pro- duction equipment and funding is required. As the industry grows, more funds would have to be committed to greater marketing and distribution of the movies to reach as large an audience as pro- vides the most returns.
Cinema infrastructure in the country continues to improve but is far from sufficient to self-sustain the domestic industry, and thus remains a limiting shortfall for the industry. With the necessary cinema infrastructure in place, moviemakers can secure returns on their investments from the box office before proceeding to the DVD retail market, which is largely dominated by piracy. As at 2011, Nigeria had only 55 indoor cinemas, which pales in com- parison to e.g. the 5,827 indoor cinemas in the United States. A variety of factors may be responsible for the large shortfall. For example, the high level of poverty limits the purchasing power of the majority of Nigerians, thus reducing the affordability of such modes of entertainment and effectively hampering the demand for cinemas. However, with increased investments, more Nigeri- ans are employed, providing more income and as a result increas- ing the demand for more cinemas. Nollywood is patronized far be- yond Nigeria partly due to improvements in digital technology. South African and UK cable companies have channels dedicated to the products of the industry while an increasing number of Carib- bean and Africans in Diaspora patronize the industry not just for entertainment, but also as a medium through which they recon- nect with their roots. American music labels seem to be on the decline as album sales decline partly due to rapid growth in digiti- zation, creating loopholes through which musical content can be obtained without the appropriate compensation. On the other hand, the Nigerian music industry seems to be on the rise. Some international labels have taken note, resulting in the signing of performers like D’banj, P-square and Wizkid to international re- cord labels. This, in some ways, is a testament to the evolution of the perception Nigerians worldwide. Rather than dwell on the oil wealth and internet scams stereotype, the international commu- nity now recognizes the Nigerian people as dynamic, creative and full of zeal.
Nigeria as a nation continues to remain one with tremendous po- tential. However, it only remains that – a nation with tremendous potential – if Nigeria remains over dependent on the oil and gas industry and adequate investments are not made in initiatives that are more promising. The music industry continues to im- press, transforming the global perception of Nigerians and em- ploying teeming Nigerian youth whilst proving to be a lucrative venture for zealous entrepreneurs. Nollywood has also been iden- tified as a promising industry with the potential to unlock both economic and social benefits. The industry has already hinted at its promise and is internationally competitive despite relatively little financial input. More investments need to be made to im- prove the quality and marketing of movies, but also enable the establishment of a self-sustaining domestic cinema industry. The government’s efforts have thus far yielded some positive results. Better quality movies like the civil war epic, Half of a Yellow Sun, Dr Bello and Tango with me show that recent investments are in- spiring improved professionalism in the industry as well as driving revenue growth. The industry however, remains far from its po- tential and with increased investments should not only help em- ploy and entertain a significant portion of the Nigerian populace, but also provide forex flows from a growing international cus- tomer base.

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