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The evolution of Nigeria movie industry: Nollywood

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The video-film industry of Nigeria has been described as one of the greatest explosions of popular culture that Africa has ever seen. It is the first economically self-sustainable film industry in Africa.

Last year, the Nigerian government released data showing tha t Nollywood is a $3.3 billion industry. After the release of that data, Nigeria’s National Bureau of Statistics also collated data that highlighted Nollywood’s greatest shortcoming: ‘severe revenue bleed’.

Of the industry’s $3.3 billion valuation less than 1 percent was tracked from official ticket sales and royalties.

The rest came from pirated reproductions sold by unauthorized vendors for roughly $2 each. As a result, producers and financiers see only a fraction of the movie industry’s economic value. Initially through the use of video technology, and now affordable digital technology, Nigeria produces more than 2000 films per year.

The industry, popularly called Nollywood, is currently ranked as the second-largest in the world in terms of output after India’s Bollywood.

Nollywood’s popularity has spread across the African continent, to the African diaspora in Europe, North America and Australia. It has even gone as far as the Caribbean and Pacific Islands.

OVERCOMING THE CHALLENGE

The first seeds for the emergence of the industry were planted in the late 1980s. Nigeria was experiencing difficulties as a result of political unrest and measures imposed by the International Monetary Fund and World Bank.

This economic climate made film-making on celluloid prohibitively expensive, and created a fertile ground for other, more affordable methods to emerge. In 1992, in Nigeria, electronics salesman Kenneth Nnebue shot a straight-to-video movie in one month, on a budget of just $12,000.

Living in Bondage sold more than a million copies, mostly by street vendors, and Nollywood – Nigeria’s movie industry – was born.

“The film follows the tale of a man who joins a secret cult and murders his wife in a ritual sacrifice to gain wealth. It is set within the thematic and stylistic characteristics of superstition, witchcraft, religion, the quest for upward mobility and melodrama in Lagos’s urban landscape.

It explores corruption, love triangles and domestic dispute.” All themes have since been replicated in many Nollywood narratives.

THE TRANSITION FROM VHS TO DIGITAL

Since the VHS industry of the 1990s, Nollywood has embraced digital technology. The industry captures the entrepreneurial spirit of Nigeria through the use of affordable and accessible technology.

These are small-scale digital cameras, desktop editing software, and distribution primarily on DVD and video compact disc. These sell for around $2 per copy in Nigeria, and are watched at home, on street corners, in cineclubs or in video parlors.

While the term Nollywood is generally used to refer to the entire industry, it is important to note that it is not unified. There is a great deal of diversity and many different variations.

Different genres exist, including horror, melodrama, comedy and action, as well as language divisions. It also includes films in English, Yoruba, Igbo and Hausa. Despite its enormous output, financing was low, with the average budget for a Nollywood film being around $20,000 to $75,000.

The industry was often criticized for low production values. It was characterized by rapid turnaround times, the lack of script development, bad lighting and sound, low-budget effects and amateur editing. Directors were mostly self-taught, and were often less important and lower down the Nollywood food chain than stars, producers and distributors. Distributors often act as producers.

Despite all of this, the popularity of Nollywood demanded film aficionados, scholars, festivals and cinema programmers to take it serious. Currently, a growing body of Nollywood scholars have emerged over the past 15 years.

THE NEW FACE OF NIGERIA MOVIE INDUSTRY: ‘NEW NOLLYWOOD’

A number of Nollywood directors have started to make higher quality films. These are sometimes referred to as “New Nollywood”, New Nigerian Cinema, or the New Wave.

These films are seen more widely than standard Nollywood fare and are accessible to non-African audiences. New Nollywood includes the work of directors such as Kunle Afolayan, Obi Emelonye, Jeta Amata, Stephanie Okereke and Mahmood Ali-Balogun.

The budgets raised for the production of films have also increased considerably, ranging from $250,000 to $750,000.

The production cycles are also much longer. The New Nollywood films are therefore recognized as very different from the low budget video format films of old.

By 2009, Nollywood had surpassed Hollywood as the world’s second largest movie industry by volume, right behind India’s Bollywood. Critics note that while Nollywood has volume, it lacks production value, and African actors have yet to breakout globally.

“The truth is key players in the global movie industry still have little idea what Nollywood is about,” said Nigerian producer Kunle Afolayan.

“The volume won’t matter until we can connect the art to the money with better content and profits.” Red-carpet premieres attracting huge audiences now take place regularly across the world from Nigeria to other African cities and urban centres with a big African diaspora.

Film festivals internationally have also picked up on its huge popularity. Special programs with a Nollywood focus have taken place in Paris, London and New York, among others.

Many observers believe that the global reach of African films could take off, led by video on demand (VOD) platforms and productions of Nigeria — the continent’s largest economy and most populous nation. Such examples include pay-TV networks and free-to-air broadcasts across the continent and beyond. South Africa’s M-Net, which broadcasts across Africa, has channels dedicated to Nollywood.

Intrepid distributors, mostly from the African diaspora, have created such platforms, video-on-demand, for Nollywood. One example is the huge iROKO tv. This has increased accessibility to African diaspora audiences.

Even Netflix has acquired a number of Nigerian films, indicative of the platform’s realization of Nollywood’s popularity and commercial potential across the world. . Earlier this year, Nollywood Producer Kunle Afolyan reached an exclusive Netflix distribution arrangement for his latest film, October 1. This adds to the 10 Nollywood related titles already on Netflix and the U.S. media company’s recent $12 million movie rights purchase of Nigerian novel Beasts of No Nation, to star Idris Elba.

THE APPEAL OF HOMEGROWN STORIES AND CHARACTERS

But it is in Africa that Nollywood has had the greatest impact. For African audiences who have for decades been fed imported films, the development of a local, homegrown film industry was hugely significant and important.

Nollywood’s popularity has spread across the continent and Nollywood films are watched all over Africa, from Kenya and Tanzania to Cameroon, Guinea and Togo. They are sometimes dubbed or translated through live interpretation at public screenings.

The model has also been exported and adapted across the continent. Videofilm industries have been emerging in many countries, including Riverwood in Kenya, Ugawood in Uganda, Bongowood in Tanzania and Ghollywood in Ghana.

There are also similar industries in the Democratic Republic of the Congo, Cameroon, Ethiopia, Eritrea, Zambia, South Africa and Zimbabwe. The most obvious explanation is that the films display familiar and recognizable cultural beliefs, lifestyles, traditions, societal and sociocultural structures, histories, settings and locations.

Their themes and narratives tap into the fears, dreams and aspirations of audiences. Nollywood seems set to expand, grow and diversify along with audience tastes, viewing habits and the industry’s technological advancements.

This is also evident in the hugely popular Tanzanian video-film industry, Bongowood. Tanzanian audiences initially watched imported Nollywood films, but from the early 2000s aspiring local filmmakers started to produce their own video-films.

The popularity of local Bongo films now outweighs Nollywood films in their country. As Africa’s VOD platforms improve prospects for the continent’s films by formalizing revenue and distribution streams, Nollywood may not be the only industry to profit. U.S. digital content purveyors could benefit too.

“If we can solve these monetization challenges for African creative content, it can apply to any creative content,” said Jason Njoku.

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Nigeria

President Buhari’s Second Term: A chance to provide peace, prosperity, and security?

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Nigerians re-elected President Buhari for another four years in what many have termed – a chance to make amends. In what could be called his third stint at the helm of affairs in Africa’s most populous country, questions about a coherent economic strategy are already being asked. In the last dispensation, protectionist posturing was worsened by a management style perceived to be distant while crucial decisions were delayed.

The economy is set to continue its recovery from the worst recession in its history. Nonetheless, the forecast is for economic growth to remain well below historic averages in the next five years. According to economic survey by Economist Intelligent Unit (EIU), Nigeria’s Gross Domestic Product (GDP) is set to reach $473.5bn in 2019 and rise to $680.9bn by 2022. This prediction will hinge, for the most part, on the current intensity of economic reforms and current rate of investment being sustained.

 

Background of the economy leading to election 2019

The Nigerian economy grew by 1.9% in 2018, an improvement from 0.8% recorded in 2017, with the non-oil sector being the fulcrum for the growth picture. Over the last quarter of 2018, the economy recorded a solid growth of 2.4% – with the expansion in the non-oil space (2.7% YoY) taming the contraction observed in the oil sector (-1.6% YoY). Dissecting the components in the non-oil territory, all subsectors expanded, with the services and Agriculture sector leading the pack. Notably, improvement in the number of active subscribers in ICT subsector coupled with mild support from transport drove the expansion in the services sector (3.8% YoY). Furthermore, while the Agriculture sector improved by 2.5% in Q4 18, it was disappointing compared to its four-year average of 3.8%. On the flipside, the oil sector dived into recessionary waters buoyed by low crude production (-2.6% to 1.91mbpd).

 

Declining Income per Capita

It is important to note that Nigeria has a huge population of over 180million and a population growth rate of 2.6% – higher than the 2018 GDP growth of 1.9%. GDP growth is projected to reach 2.0% and 2.2% in 2019 and 2020 respectively before rising to 3.2% by 2021. This means Nigeria would have had five consecutive years of declining income per capita – from 2016 to 2020. A burgeoning youth population is also unlikely to be matched by job growth, meaning unemployment – at over 40% – is likely to rise even further.

A breakdown of the GDP components show that Nigeria’s gross fixed investment, at $66.5bn, will account for just 14.0% of GDP in 2019. This pales in comparison to that of other notable emerging economies – Brazil (19%), India (27.12%), China (42.86%), and South Africa (18.7%). Majority of countries in the world have gross fixed investment of 18-22%. The EIU goes further to forecast that gross fixed investment in Nigeria will rise by just one basis points to 14.1% ($86.2bn) by 2022.

 

Why does this matter?

The importance of this component of GDP is that it is a clear indicator of the future productive capacity of the economy. The aforementioned basically means that the current and projected rate of investment is simply suboptimal and far below the level required to propel Nigeria to an accelerated growth path. It is incapable of providing Nigeria with the investment impetus that will have the desired multiplier effect on output. Nigeria has also grossly underinvested in its infrastructure. The existing infrastructure gap is estimated at over $300bn and requires 10% of GDP ($37.6bn)/annum over the next 10 years to bridge – an unlikely feat given that  current infrastructure needs are far in excess of current cash flows. Nigeria’s capital budget in 2018 was $7.98bn – 26.6% of total budget and 2.2% of GDP. This compares to 6% of combined GDP of emerging market economies. Nigeria’s share of emerging markets total spend on infrastructure is currently less than 1%.

 

Few options, Tough Choices

Nigeria’s high population growth rate means it must be much more efficient with economic policy. Putting Nigeria on an accelerated path to a free and market driven economy requires making tough game-changing decisions now. It will begin with figuring out how to raise the level of gross fixed investment to levels above and beyond the global average of 18-22%. Investment in the next 3-5 years will depend on policies and incentives.

Galvanizing domestic and international investment will be crucial. This will require a structure that incentivizes private investment considerably more than what is currently obtainable. Achieving this will require significant increases in public investment in infrastructure, in addition to more comprehensive and deep-seated market oriented structural reforms.

 

The Game changing Formula

Raising the level of investment in infrastructure given the government’s current revenue and borrowing constraints requires rethinking ways to attract private sector funding in the form of Public Private Partnerships (PPP). Outright sale and concessions of government assets– airports, seaports, inner city highways and trunk roads– should be a key consideration for policymakers.

Airports concession has the potential to lower the average cost for aviation operators by 50%. The government’s stake in the power distribution companies should be sold to the private sector while the power sector forbearance needs to be dealt with. The rail investment program needs to be accelerated while the road networks to major seaports need to improve.  Another item that is top on the list of reforms is the foreign exchange policy where a movement to currency convertibility with minimal intervention is paramount. Fears of a wild depreciation if the Central Bank of Nigeria lets go of its current policy of a managed float, are greatly exaggerated. The almost insignificant deviation between the parallel and the Investor Exporter Foreign Exchange (IEFX) window – which is closer to market equilibrium than the official rate – supports this fact. There is also the issue of fuel subsidy which has now taken the form of under recovery as the Nigerian National Petroleum Company (NNPC) now fully bears the brunt of the subsidy as the sole importer of Premium Motor Spirit (PMS). Deregulating the downstream sector of the petroleum industry requires the removal of subsidies, which will spur competition, bring about efficiency and increased investment in domestic refining – the lack of which has been a huge drain on Nigeria’s foreign exchange earnings over the years.  Not only is a game changing formula now imperative, it has become inevitable. Nigeria can continue at its current pace of reforms and investment – a recipe for chaos, social and political disintegration; or take drastic measures to raise public and private sector investment to levels that will accelerate productivity and economic growth.

THE ROAD AHEAD

Ending extreme poverty must be a top policy priority for Nigerians and the new government. The country has the capacity to deal effectively with poverty: large endowments of natural resources, especially oil; a young and highly educated population; and many people adept at entrepreneurship and the creation of wealth.

Nevertheless, there are many threats to the creation of wealth. Two of them stand out: widespread corruption and the absence of peace and security in many regions. Corruption, like embezzlement of public funds, has plagued Nigeria since independence. Buhari came to power in 2015 promising to clean up corruption and restore professionalism in the public services. Although he appears to have made significant progress in that fight, his critics say that he only targeted his political opponents and ignored his allies and supporters. Still, many Nigerians give him credit for his efforts and for not illegally amassing wealth for himself. To deal more effectively with corruption, Buhari must now significantly improve openness and transparency in government communication, especially with respect to government procurement programs.

The Buhari government also needs to deal with extremism and other threats to peace and security like Boko Haram and the lawless armed gangs who roam parts of the country kidnapping people and holding them for ransom. This must be done not just through military action but also by providing opportunities for young people, especially in the rural areas, for self-actualization.

Finally, the government must address the issue of lack of basic infrastructure for development: passable roads, adequate and reliable power, water treatment plants (access to clean drinking water is a major problem for most communities), basic health care, affordable housing (especially in urban areas), police protection, and other services that can enhance the ability of citizens to live in peace.

Posterity will judge Buhari and his government by how well they use the opportunity granted to them by Nigerian voters to make peace, security, and prosperity possible for their fellow citizens.

On the economic front, we expect resilience in agriculture sector and a recovery in the oil sector to be the key drivers for growth in non-oil and oil sector accordingly. In the non-oil sector, muted growth in ICT and in turn services as well as weak growth in Manufacturing due to depressed consumer wallet and delay with minimum wage bill, guides to slower growth in the non-oil sector of 1.3% YoY (2018: 2.0% YoY). In the oil space, the additional 200kbpd from the Egina oil field guides the expectation of an expansion in crude production over 2019 (2.06mbpd), albeit capped by OPEC cut. That said, it is expected growth in the oil sector to print at 7.1% (2018: 1.1%). Overall, 2019 growth estimate is forecast to 1.98%, a notch away from 1.93% recorded in 2018. For Q1 19, a slowdown in growth is expected to 1.3% YoY driven by a contraction in the oil sector (-1.1% YoY) and moderation in non-oil sector growth.

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