The contributions of Nigeria’s film industry, the second-largest in the world in terms of number of films produced, to the national economy have become all the clearer after the rebasing of the country’s GDP last year.
A move to recalculate the net worth of Nigeria’s economy in 2014 saw the number of industries or activities used for assessment purposes rise from 33 to 46, with a noticeable shift in emphasis towards technology-driven sectors. Among the segments included for the first time were the film industry, the IT sector, the music industry, on-line sales and telecommunications. As a result of the rebasing exercise, Nigeria’s GDP in 2013 jumped from an initial estimate of $285.5bn to $510bn.
The Nigerian film industry, known as Nollywood, is a key contributor to the increase. Under the rebasing conducted by the state statistics agency, the film industry accounted for more than 1.4 percent of GDP – or $7.2bn of Nigeria’s economy. With an estimated 1m people directly or indirectly working in the industry, the making, distributing and screening of moving pictures has become the country’s second-biggest source of employment after agriculture.
Speaking in February, Robert Orya, the CEO of the Nigeria Export Import Bank − one of three development banks owned by the federal government − said that Nollywood generates at least $590m annually, behind only Hollywood and Bollywood. Quoting an UN publication, he added that the African film industry, in which Nollywood is by far the dominant player, would contribute significantly to the expected 5.2 percent GDP growth projection for the continent in 2014.
The spread of digital technology will be a major driving force for the film industry in the years to come, as domestic consumption increases. Higher levels of internet access, increased penetration rates for smartphones and improved bandwidth are all expected to help generate a production boom.
An increase in demand for programming is also likely to generate new opportunities for content producers. According to a PwC report, Nigeria’s entertainment and media revenues will more than double to reach an estimated $8.5bn in 2018, from $4bn in 2013, with internet one of the key drivers. Mobile internet subscribers are forecast to surge to 50.4m in 2018 from 7.7m in 2013, according to the report.
Likewise, pay-TV penetration is forecast to reach 24.4 percent by 2018, with competition amongst digital terrestrial television operators set to grow after Nigeria migrates to digital. However, doubts remain over whether the country will be able to meet the June 2015 digital switchover deadline – set by a 2006 agreement brokered by the UN’s International Telecommunication Union.
The need for homegrown content remains crucial to the development of the industry, according to Charles Igwe, filmmaker and CEO of production firm Nollywood Global. ‘All content is going digital, there is an explosion of film content, in all forms,’ said Igwe at a conference in January. ‘Big telecoms companies will have to improve delivery … creating the capacity to make content is imperative if we are going to exist in this space,’ he added.
Platforms like Nigeria’s iROKOtv are providing new distribution channels for Nollywood films, which number more than 2000 produced annually. The tech company, which pays filmmakers about $10,000 to $25,000 for the digital rights to stream their content for a period of time, claims to be the world’s largest online distributor of African content with a catalogue of 5,000 Nollywood films.
However, despite standing to benefit from the increasing number of distribution options, Nollywood producers still face significant challenges. According to the Oxford Business Group (OBG), while Nigeria’s films are often produced for relatively modest amounts of money, funding and financing continue to be a challenge for filmmakers, and gaps in infrastructure and coverage plus an unreliable electricity supply limit digital distribution channels in the shorter term.
‘Piracy remains another issue with the illegal copying, distributing and unauthorised broadcasting of movies eating into box office earnings. While efforts have been made to strengthen intellectual property rights, including a N2bn ($9.85m) state fund to improve Nigeria’s content distribution network announced in late January, illegal downloads and bootleg DVDs look likely to continue undercutting revenue,’ the OBG said.
Despite the challenges, many onlookers believe Nollywood’s contribution to GDP is on track to rise during 2015. In late December, the IMF said it expected Nigeria’s economic expansion to ease somewhat this year, with GDP on course to increase by 5 percent, having slowed to 5.9 percent year-on-year in the fourth quarter of 2014. However, the IMF noted that the non-oil sector was to be less affected by slower growth, setting the scene for newly recognised segments, like Nollywood, to continue their expansion.