Regaining Investor’s Confidence in Film: Why Nigerian Creatives & Industry Practitioners Need to Take Salient Steps

  1. Financing the Nigerian Film Industry
  • History 

There was a time in the Nigerian film industry (pre-Nollywood) when film financing had a semblance of structure and formality, as both the government and corporate entities played an active role in providing easy access to funds for filmmakers [1]. The Nigerian Film Corporation (NFC) and the now-defunct Nigerian Film Distribution Company (NFDC) were disposed to granting filmmakers production loans up to N100,000, where a feature film could be produced with a budget ranging from N300,000 to N500,000 then, before the structural adjustment program (SAP)[2]. Whilst corporate entities were also willing to finance films, as could be seen in 2 instances: (1) IMB Securities reportedly raised N3 million for Francis Oladele’s Oju Aiye (Eye of the World), and (2) Rims Merchant Bank and Wema Bank reportedly raising N815,000 for Afolabi Adesanya’s Ose Sango (Sango’s Wand) [3]. However, since the videotape format phased out celluloid, and Nollywood as we know it was birthed, film financing has largely been an undertaking done by the filmmakers themselves and individual investors, with the government and corporate entities having little or no involvement.

Recently, the industry appears to have gained some level of organization and purpose: from the $200 million Nollywood intervention fund announced a few years ago under the then President Goodluck Jonathan’s administration [4]. Also, the Central Bank of Nigeria (CBN) in collaboration with the Bankers’ Committee via a circular dated 19th July 2019 announced the Creative Industry Financing Initiative (CIFI) to improve the creative’s access to financing. 

Furthermore, international film companies are beginning to take a more than curious interest in the industry. In June of this year, the American video-streaming platform and production company, Netflix, entered into an agreement with indigenous production company Ebony Life, for the adaptation and production of 2 popular Nigerian books [5]. This news was not in isolation, as Netflix announced its first African original scripted series during the visit of the company’s Co-Chief Executive Officer, Ted Sarandos to Nigeria in February, 2020, and they, Netflix, had also previously acquired and distributed some Nigerian content [6].

Apart from investment in companies, there are also private investors in individual film projects, notable mention is the West African Film Fund, a $1 Million fund for investment in a selected slate of movies announced by FilmOne in conjunction with a South African media company and a Chinese Media company. 

On the surface, these developments appear to be great for the industry, but there are still a lot of structural, deep-rooted issues that must be addressed if the current investment momentum and interest in the industry are to be sustained.

[1] Silver A. Ojieson, “Interrogating Nollywood and its Sources of Funding: The Case of Invasion 1897.” Ekpoma Journal of Theatre and Media Arts (EJOTMAS). Accessed on 13 th July 2020 at www.ajol.info/index.php/ejotmas/article/view/163547
[2] Ibid.
[3] Ibid.
[4] Alex Eyengho, “Jonathan’s $200 million intervention fund!” Vanguard, 30th June 2012. Accessed on 13th July 2020 at www.vanguardngr.com/2012/06/jonathans-200m-intervention-fund/
[5] Ruth Okwumbu, “Netflix signs multi-title deal with Mo Abudu.” Nairametrics, 12th June 2020. Accessed on 6th July 2020 at www.nairametrics.com/2020/06/12/netflix-signs-multi-title-deal-with-mo-abudu/
[6] Chidinma Nwagbara, “Netflix inks another Nollywood deal.” Nairametrics, 16th September 2019. Accessed on 6th July 2020 at www.nairametrics.com/2019/09/16/netflix-inks-another-nollywood-deal/

  1. Structural Issues: Creation of Functional Associations and Guilds
  • History of Associations and Guilds in the Nigerian Film industry (Nollywood)

With the Nigerian film industry growing in stature, and the birth of Nollywood, stakeholders (marketers, financiers, practitioners) felt the industry needed to inculcate some structure into its business at that point. This led to the creation of the first wave of associations and guilds catering to the different segments of the industry [7] . Some of these associations include: Association of Movie Producers (AMP) formed by the likes of Zeb Ejiro, Kenneth Nnebue, Amaka Igwe et al; Actors’ Guild of Nigeria (AGN), which was formerly Nigerian Actors’ Guild (NAG); Directors’ Guild of Nigeria (DGN); Nigerian Society of Cinematographers (NSC); and a powerful marketers association, which was formed by the major movie distributors at the time [8].

  • Setbacks faced by the Associations and Guilds in the industry

The emergence of industry centered associations and guilds, though laudable, did not yield the anticipated impact as these associations never truly matured individually. In addition to the above, more splinter and factional groups emerged from the main associations over the years, which further watered down the effectiveness of these associations. The emergence of the factions was mainly caused by internal conflict and politics amongst members, fighting for personal interest as opposed to the collective good. These, among other issues derailed the vision and the foresight of its founding members. Some of the specific issues include;

– Ethnic & Religious diversity

– Lack of cohesion amongst members

– Alleged mismanagement of funds

– Absence of quality control

Factional groups that emerged out of the melee include: Association of Core Nollywood Producers (ANCOP), which was formed by key stakeholders of the Association of Movie Producers (AMP), Association of Nigerian Theater Practitioners (ANTP), formed by the Southern stakeholders, Motion Picture Association of Nigeria (MOPAN), formed by the Northern stakeholders, etc [9].

  • Way forward for Associations and Guilds in the industry

The Nigerian film industry has over the years been touted as Africa’s major film power house, sadly it remains a largely informal sector yet to harness half of its potentials. One would expect that after decades of existence, such a promising industry would be able to boast of having its own unified national body or association guiding and protecting its members. For example, Lawyers have the Nigerian Bar Association (NBA). This is by far one of the most basic foundational building blocks which is typical of properly structured and developed film industries in other parts of the world. 

For the industry to properly harness its potentials, the key issue of proliferation of associations and guilds needs to be resolved. All stakeholders in the industry must unite and decide as an industry on the associations and guilds they want to represent the interests of the various sectors of the industry. For this model to be effective, strong internal and corporate governance rules must be adopted in such associations and guilds to prevent a re-occurrence of factional groups emerging out of these associations.

[7] Alex Eyengho, “Structures in Nollywood: Associations and Guilds.” Vanguard, 11th August 2012. Accessed on 3rd July 2020 at www.vanguardngr.com/2012/08/structures-in-nollywood-associations-and-guilds/
[8] Ibid.
[9] Ibid.

An industry with functional associations and guilds is a plus to the ecosystem. Functional associations and guilds give much needed regulatory and quality control to the different sectors of the industry. Consequently, this adds some form of credibility to the output and quality of the practitioners in the industry, hereby giving investors the confidence they desire to invest in the industry.

For instance, The Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) represents approximately 160,000 film and television actors, journalists, radio personalities, recording artists, singers, voice actors, and other media professionals worldwide. The union’s mission is to organize all work done under its jurisdictions; negotiating the best wages, working conditions, health and pension benefits; preserving and expanding members’ work opportunities; vigorously enforcing contracts; and protecting members against unauthorized use of their work [10]

As the coronavirus pandemic progressed, the SAG-AFTRA, along with other core Hollywood guilds such as the Directors Guild of America (DGA), International Alliance of Theatrical Stage Employees (IATSE), International Brotherhood of Teamsters (IBT) and the Basic Crafts spent several weeks consulting with “an array of experts ranging from preeminent epidemiologists and scientists to risk analysts and specialists in public health and occupational health and safety” in order to determine the safest way for casts and crew to get back to work [11]

The Nigerian film industry must continue to mirror its counterparts in other countries. For instance, looking at Hollywood’s response to the adverse impacts of the pandemic and how its stakeholders have been able to bring various adjoining professions across board together, showing what each profession brings to the table, and the positive effects their working together brings to the growth of the industry. Through unified guilds and associations, Hollywood has also been able to show the importance of key stakeholders like Entertainment Lawyers, Accountants, Surgeons amongst other professions, highlighting the economic, structural and legal contributions of these professions to the industry as a whole.

This sort of collective support and proactivity by these associations to ensure that the creatives they represent are able to remain in business and are considered in key policy making decisions, is a clear example of why the Nigerian Film industry is yet to reach the heights it ought to have attained.  

A promising step taken by stakeholders is the recently formed Cinema Exhibitors Association of Nigeria (CEAN) and the Film Distributors Association of Nigeria (FDAN). These bodies were set up by leading industry stakeholders to oversee and maintain industry standards, and protect the interests of participants and new entrants in the cinema exhibition and movie distribution industries respectively; especially during the COVID-19 pandemic where they have been in constant talks with government authorities to ensure a safe reopening of the industry as a whole. Though early days and these bodies only overlook an aspect of the industry, it is indeed an improvement that needs to be built upon and emulated by other aspects of the industry.

[10] Mission Statement, SAG-AFTRA, accessed on 8th September, 2020. Available at: www.sagaftra.org/about/mission-statement
[11]Ben Pearson, ‘Hollywood Guilds & Unions Unveil New Production Protocols to Combat the Coronavirus’, accessed on 8th September, 2020. Available at: www.slashfilm.com/new-production-protocols/

  1. Technological Issues: Data (Collection & Accessibility) 
  • Use of Data in Hollywood

Modern businesses, both small and big, are leveraging on technology and data in guiding their business decisions.

Recently, the film industries in developed countries have been testing the use of data in their operations, at both the business and creative ends. 

In 2018, it was reported that 20th Century Fox, the US production and distribution juggernaut, used artificial intelligence to predict the films that people desired to see [12]. In doing this, the company was employing machine learning to analyze movie trailers, and then comparing the data from this analysis with similar data from other analyzed films. Another technological tool that is currently in the market, and is gaining popularity with major studios and other stakeholders is “ScriptBook”, a script [13]commercial-performance gauging tool by the Belgian company of the same name. According to the founders, the tool (ScriptBook) can predict a movie’s success by simply analyzing its script, and if its assertions are to be believed, major Hollywood studios are already `adopting this.

Streaming giant, Netflix, have from inception employed data usage in its operations. Its recommendation engine is able to recommend titles suitable to its millions of users within seconds of the user opening the application. Its engine is able to do this via algorithms and the data the company collects from its millions of users. According to Netflix, its recommendation engine saves the company about $1 billion per year in subscribers who would have left the service for lack of titles for their viewing pleasure[14].

  • Use of Data in the Nigerian Movie Industry “Nollywood”: Box Office Numbers and Other Metrics

Unfortunately, the Nigerian Film industry in the past failed to adopt an integral part of the industry. This is mostly because of the dearth of critical infrastructure in the industry. However, this is beginning to change with more investment coming into the industry, and more professionals practicing at both the business and creative ends of the industry. 

In recent years, box office receipts of Nigerian films at the cinemas have been released to the public. At the forefront of this practice is the Cinema Exhibitors Association of Nigeria (CEAN), which collates box office data from the various exhibitors across the country, and presents it as single data point to the public, through its collaboration with Comscore, an American media measurement and analytics company [15]. This data is what investors looking to invest in the industry seek, as it helps them to gauge the viability of the market through the performance of films released. 

[12]James Vincent, “20th Century Fox is Using AI to Analyze Movie Trailers and Find Out What Films Audiences Will Like.” The Verge, 2nd November 2018. Accessed on 3rd July 2020 at www.theverge.com/2018/11/2/18055514/fox-google-ai-analyze-movie-trailer-predict-success-logan
[13] James Vincent, “Hollywood is Quietly Using AI to Help Decide Which Movies to Make.” The Verge, 28th May 2019. Accessed on 3rd July 2020 at: www.theverge.com/2019/5/28/18637135/hollywood-ai-film-decision-script-analysis-data-machine-learning/
[13]Nathan McAlone, “Why Netflix Thinks its Personalized Recommendation Engine is Worth $1 Billion per Year.” Business Insider, 14th June 2016. Accessed on 3rd July 2020 at www.finance.yahoo.com/news/why-netflix-thinks-personalized-recommendation-193602269.html

While this practice by the CEAN is commendable, it is suggested that the CEAN and cinema exhibitors should also include the budget of films as part of the data entry. This would enable investors see at a glance the economic viability of films produced and released in Nigerian & international cinemas, also boosting their confidence and encouraging them to invest in Nigerian created content.

Indeed, the sooner the Nigerian film industry (For example “Nollywood”) as a unit starts exploring and adopting the various types of data collation systems, the better for the financial growth of the industry. Among other things, the availability of this data will help potential investors better assess and take calculated risks.

  1. Legal Issues
  • Informality of the Industry

According to Jade Miller in her book [16], “Nollywood is an industry defined by “informality, opacity and the decentralization of power”. She writes that informality in Nollywood is defined according to 5 criteria: 

  • not documenting sales, 
  • not utilizing prosecutable legal contracts, 
  • not using agents, 
  • not pursuing copyright violations, and 
  • privileging undocumented financing and distribution networks [17].

This position has however significantly improved as a lot of the players in the creative industry are becoming more interested in the protection, enforcement and proper exploration of their Intellectual property rights. Thereby creating a growing number of Intellectual property related disputes like the matter of RACOUNTEUR PRODUCTIONS V. DIONI VISIONS LIMITED & ORS.

  • An Outdated Copyright Act 

Nigeria’s first copyright law was a copy of the English Copyright Act 1911, and was applied until it was repealed and replaced with the Copyright Act of 1970. The Act of 1970 was replaced by the 1988 Act because it was considered inadequate as it failed to combat and punish the increasing rate of piracy and other copyright infringements [19]. In 2012, the Nigerian Copyright Commission led the drafting of a new copyright bill, published in 2015. Till date, it hasn’t been effected. 

[15]See the CEAN website at www.ceanigeria.com/box-office
[16] Jade L. Miller, “Nollywood Central: The Nigerian Videofilm Industry.”
[17] Annemarie Iddins, Review of Jade L. Miller’s “Nollywood Central: The Nigerian Video film Industry,” International Journal of Communication 13 (2019), Book Review 771–773, Accessed on 28th June 2020 at [18]Suit No.: FHC/L/CS/401/2017 available at: www.drive.google.com/file/d/1Ndo0MlHR9VBQSwaZOGQT3ZGdT0AsDSrr/view

Indeed, the Copyright Act [20] provides for penalties for infringements , the fines (values) provided by the Act have clearly been overtaken with time and presently way too low to stand as deterrents to infringers. For instance, in N.C.C. V. ALI A. BALA [21], where the accused was found guilty of book piracy, the court sentenced the accused to pay ₦100.00 (One Hundred Naira) fine or 3 (Three) months imprisonment. This cannot continue, if the industry is to move forward.

Furthermore, the current Copyright Act is inadequate to address the recent digital and technological developments in the film industry (e.g. streaming), and so infringers are able to take advantage of this lacuna to the detriment of filmmakers. Consequently, the industry loses revenue that should accrue to the filmmakers and investors, to these (digital) pirates. This modern piracy if not curtailed urgently, could prove to be a huge barrier and blow to the confidence of interested film investors. 

  1. Recommendations

With the Nigerian film industry “Nollywood” on the cusp of exponential growth and development, the industry must look within, and dig deep by coming together to take steps to rectify some of the malaise and practices the industry has been tainted by, which have collectively had an adverse effect on investor appetite for the industry.  

For the Industry to attain the promising heights which have been forecasted for it by various national and international stakeholders, the industry must look into the following areas:

  • Structures: The key players and stakeholders in the industry must come together to create a functional body(ies) that will represent the interests of the different parts of the industry. The existence of several associations which have conflicting/varying goals have diminished the effectiveness of these multiple players.  In the US, bodies like the Writers Guild of America (WGA), Directors Guild of America (DGA) are fully functional bodies representing the interests of writers and directors respectively in Hollywood. These bodies have collective agreements signed with almost all the major and independent studios and companies in the US. This further solidifies the strength of these bodies, and gives the industry certainty and structure.

Steps taken by SAG-AFTRA (for example the recently signed 2020 Television/Theatrical contracts) also need to be emulated to ensure industry practitioners are well protected in this trying times.

For instance, Mark Litwark recommends that as soon as writers write a story, they register it with the Copyright Office (the equivalent of the Nigerian Copyright Commission) or at least with the WGA. Although registration with the WGA does not give the writer full legal rights, it creates evidence that can be used in the event of a plagiarism dispute [22].

[19]Samuel Andrews, “Netflix Naija: Creative Freedom in Nigeria’s Emerging Digital Space?” African Liberty, 23rd March 2020. Accessed on 1st July 2020 at www.africanliberty.org/2020/03/23/netflix-naija-creative-freedom-in-nigerias-emerging-digital-space/
[20] Section 18(3) of the Copyright Act 1988
[21] (Unreported Suit No: FHC/ABJ/CR/127/2013 at the Federal High Court Abuja, FCT Division)
[22] Mark Litwark, Dealmaking in the Film & Television Industry: From Negotiations to Final Contracts (4th edn, Silman-James Press 2016) 202

  • Technology: The world we live in today is driven by technological innovation, and, it goes without saying that any business looking to have an edge in any sector must be seen to be deploying some form of technology. The film industry is no different, hence, the Nigerian Film industry must be seen to be leveraging on technology and data in their daily operations. If Nollywood hopes to regain and maintain investors’ confidence, it must simply adopt proper technology and data usage. The industry must be seen to be innovative and constantly improving on its achievements.   

Presently, due to the Covid-19 pandemic and implementation of social distancing rules, cinemas can no longer be filled to capacity. This clearly will adversely affect the financial returns of both the cinema owners and film makers, as such it is pertinent that film makers and cinema owners immediately look more towards releasing their projects via digital platforms, to help mitigate their losses and ensure investments are recouped.

  • Legal (Importance of IP Protection & Enforcement)

Whilst we applaud recent developments in the sensitization of creatives about their Intellectual property rights, we must acknowledge the fact that we are still scratching the surface. There is the need for our laws and judicial system to be updated and continuously trained to cover IP protection and enforcement. E.g. The Nigerian Copyright Law.

For meaningful change to occur in the creative industries, our Intellectual property laws and policies must recognize IP as an asset class, and aggressively provide for its protection, both in the physical and digital spaces. Without this, the industry will continue to be at the mercy of pirates, and investors will forever be discouraged due to the lack of security and enforcement for the protection of their assets (investment). 

  • Accountability & Transparency from Producers/production companies

Over the years, the general complaints filed by most investors in the Nigerian film industry is that they never get good returns for their investment. Some don’t even get back their principal. Investors have experienced situations where producers or production companies misappropriate funds given to them, do not deliver the project as at when due or agreed on by parties, declare irregular returns or losses to their investors, and even divert investments received for movie projects to personal use.

For the industry to make serious strides in regaining or retaining investors, accountability & transparency are key factors going forward. Producers/production companies must be seen to honor agreements, release accurate data on their finances and deliver projects as at when due or agreed on. 

A lot of questions have been asked in the past as regards the Financing made available by the Bank of Industry and if this opportunity was properly used. Most practitioners complain about the hurdles to be crossed before being able to access such funds and the interest rates on the loans. We reckon that more financing opportunities of such nature must be constantly explored with friendly interest rates, so interested creatives are not discouraged.

Perhaps it is time to explore the establishment of specialized project/film financing firms, mainly interested in the creative industry. These firms can by themselves manage the production of movie projects, disbursement of funds required and collection of revenue at the end of the projects.

  • Government Support: There is the need for more support and encouragement for the creative industry by the Government through its regulatory agencies. These said agencies need to work with and not frustrate the efforts of industry practitioners, with the aim of restoring the confidence of investors in this sector. 

The role of the government as an enabler is extremely important, as its proactive stance on some of the vices that have hindered the growth of the industry will inevitably boost investor confidence.

These could be done through:

  • Grants: The government can help ease the issue of finance/access to finance facing the industry by giving grants to intended content creators registered under their platform. These grants can be in form of small loans that can be easily repaid post production.

The said grants can also be explored through a PPP (Private Public Partnership) initiative that allows private investors come together with Federal or State governments on providing and administering finance to the industry. Also creating ways in which indigenes of the states can be employed and trained on content creation. E.g. Establishment of Films village, Establishment of Film/Acting schools.

  • Tax reliefs: Tax policies that will create more burden on the creative industry should be totally discouraged, especially for an industry that is yet to fully establish itself, rather state governments should be creating policies that will invite creatives to their state to explore and broaden their tourism opportunities.
  • Enforcement: The judicial system as well as the adjoined government agencies (E.g. the Nigerian Customs, the Nigerian Copyright Commission) must not relent in their efforts to ensure speedy resolution of disputes and effective execution of enforcement orders to help curb piracy and deter intending offenders.
  • Informed policy decision-making process in order to cushion the effects of the COVID-19 pandemic on the many film making dependent businesses. Stakeholders and the government must take urgent steps to develop measures that will guide or ease the re-opening of cinemas and film studios as soon as possible, to help mitigate the losses the industry and its investors are currently experiencing.

Despite the positives recorded in the industry in the cinema and foreign investment spaces in the last few years, the COVID-19 pandemic has threatened to erase all of that. Cinemas across the country had been closed since the later part of March this year (2020) and were only recently opened with social distancing rules being applied, as such causing decline in their revenue. [23] This development has serious negative implications for the industry going forward, as investors, local and foreign alike, would be wary of happenings in the industry. 

To help cushion the losses being experienced by the industry, the stakeholders must come together to proffer solutions aimed at rescuing the industry in this trying time. The Cinema Exhibitors Association of Nigeria (CEAN) is presenting such a case to both the state and federal governments on behalf of cinema operators in the country, and the outcome of this advocacy is awaited by the industry, particularly the cinema operators. In other jurisdictions, film trade bodies and associations are proposing unique solutions to their governments for aid to jumpstart their movie industry.[24] It is doubtful if the same solutions could be proffered here due to the duplicity of associations and bodies representing the same interest groups.

Indeed, despite the Industry’s promising potentials to be every investors heaven, there is still a lot of work to be done by both the government and private stakeholders, before this can be achieved. The Industry’s foundation defects and fundamental issues as listed above must be addressed as recommended and the industry stakeholders must re-align in good time to replicate global best practices and create an investor friendly climate. 

Perhaps it is indeed time for the Nigerian film industry in its entirety to unify and adopt the umbrella called NOLLYWOOD.

[23] Section 18(3) of the Copyright Act 1988
[24]Manori Ravindran, “Canada’s Film & TV Industry Presents Unique Insurance Solution with Government Support.” Variety, 2nd June 2020. Accessed on 20th July 2020 at https://variety.com/2020/film/global/coronavirus-canada-cmpa-government-insurance-film-tv-production-1234622623/

CONTRIBUTORS: 

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BASHIR O. RUFAI
PARTNER, STALWART LEGAL

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TAYO FASHESIN
GROUP LEGAL EXECUTIVE, FILMHOUSE GROUP

LOTANNA ATTOH ESQ.

FRANCISCA TANIMOJO

ASSOCIATE, STALWART LEGAL

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