Investment and Partnership: How Nollywood can benefit from Hollywood

By Oluwatamilore Fashina

The Covid-19 pandemic impacted entertainment industries worldwide. Nollywood was not an exception to this. Throughout the pandemic, artists and filmmakers struggled to make a living in the home of the world’s second-largest movie producer. However, despite this struggle, the fortitude of the Nigerian film industry shined through. The pandemic caused many major Hollywood releases to be strictly video-on-demand. As a result, throughout 2021, due to the innovation of Nigerian filmmakers, Nollywood films dominated the country’s box office.

However, it was not only through theatrical releases that the industry managed to keep its lights on. Filmmakers took to streaming platforms to give Nollywood films and tv an international reach.
Given the industry’s show of resilience – as well as the fact that it is a stronghold of the creative sector, which is currently the second-largest employer in Nigeria  – it is unsurprising that the Federal government is seeking to stimulate the industry with further investment. The issue is how that investment should be made. The Federal Government is seeking to improve the quality of Nollywood films through increased collaboration with the US. While this is a step in the right direction, in order to maximize this relationship needs to provide strategic domestic investment as well as mutually beneficial international partnership. Through these means, the government can facilitate growth for above-the-line talent (producer, directors, actors) and below-the-line talent (special effects crew, visual effects crew, editors).

Domestic Investment
The Federal Government is rightly focused on improving the quality of Nollywood films. This has been a longstanding critique of the industry that produces approximately 50 films a week at its peak. To do so, though, the Federal government cannot just rely on foreign investment. It must increase its own to avoid investor reliance. Historically, the government has shown its commitment to Nollywood with financial support. In 2011, it granted loans to the industry of approximately N83 billion ($200 million). This investment was additionally supplemented by grants towards “Project Act Nollywood,” which was directed at improving production-distribution networks and capacity building.

Additionally, the government formed the Creative Industry Financing Initiative (CIFI) in response to the pandemic. The purpose of the initiative is to increase youth employment, and it is based on four pillars: film, music, fashion and information technology.  Production companies may receive up to a N30 million ($83,000) loan through the initiative, while distribution companies may receive up to N500 million ($1.2 million). The loan is repayable over 3-10 years with an interest rate of 9% per annum. However, the CIFI has illustrated that the government is taking the wrong approach to investment in Nollywood.

To see consistent improvements in quality across the industry, the government must take a bottom-up approach instead of a top-down approach.
While the CIFI may have been of value to established studios throughout the pandemic, it left young and independent talent stranded. Although the CIFI was stated to be open to “individuals as well as micro, small and medium scale enterprises,” in entertainment, a 9% interest rate is simply unaffordable for all those listed. As such, the government is skipping over the value of independent projects to the film industry. If the government wants to look to Hollywood to improve Nollywood, it should understand the critical cultural importance of independent films.

In the US, they were used to create cinema that broke away from the traditional mold and instead told new stories on contemporary issues which artistically gripped audiences. With support, the same can be done in Nigeria. Additionally, it provides greater opportunities for above-the-line talent to receive recognition and break into the industry, ultimately furthering job creation. These films can also be submitted for awards and festivals, such as the Independent Spirit Awards and Sundance Film Festival, where they have the potential to receive international recognition and even be acquired by distributors.
The value of independent films to the quality of the film industry cannot, thus, be overlooked. However, due to the economic realities of independent projects, the government cannot purposefully facilitate their growth with the exact loan requirements as studio projects.

The percentage of loan repayment provided by CIFI should thus be scaled according to the size of the production company to make government support for films affordable. Without making these types of initiatives accessible, we risk leaving behind independent filmmakers and young entertainers and stalling one of the country’s most fruitful industries.

Mutually Beneficial Partnership
With the above in mind, one of the more interesting entertainment trends in recent years is that Americans consume more foreign content than ever. It appears that subscription video on demand (SVOD) is the catalyst behind this change. US viewers’ top 5 international markets by the end of 2020 were the U.K. (8.3%), Japan (5.7%), Canada (3.2%), Korea (1.9%), and India (1.5%). However, with the growing interest of SVOD giants such as Netflix and Amazon, Nollywood has the potential to acquire a more significant market share.

The draw of Nigeria for these companies is its already established film industry and its high potential to be a large streaming market. This attraction is seeing the increased distribution of Nigerian-produced films on these platforms. However, what is unique about these large SVOD companies is that they do not only act as film distributors they also function as producers. While it is excellent that these companies are increasingly distributing Nigerian films and tv, the opportunity to attract them to produce their own originals in Nigeria should not be missed.
Traditionally, in the US, states seeking to obtain the benefits of having film production within their borders would offer film tax credits. These essentially meant that production companies would save money on taxes owed or receive other financial benefits. Although the Federal Government provides tax incentives for foreign investors in other designated sectors, none currently exist for the film industry.

Of course, granting a tax incentive has to be mutually beneficial. One of Nollywood’s most significant challenges is the lack of technical skills for below-the-line talent. There is a skills gap that will require training and opportunities to fulfil. As a result, the Federal Government should issue tax breaks to foreign producers committed to: 1. Using a certain number of Nigerian below-the-line talent in their production; and 2. Implementing or financing training programs for Nigerian below-the-line talent. With this policy, the country will be able to draw further investment into its entertainment industry and provide increased job creation and education. In return, SVOD companies will have greater access to the Nigerian market.

*Conclusion*
Nollywood is an incredible asset financially and culturally to Nigeria. The Federal Government looking to the US to help stimulate the industry is wise. However, it must look at what it can do internally before it looks externally. Further, it must ensure that foreign investment is mutually beneficial and helps the entire industry from the bottom up. All this can be done through strategic decision-making.
·        Mr. Fashina is an Entertainment Attorney based in California