Today we turn our attention to Nigeria’s creative sector (arts and entertainment). The film industry is seen as a dominant player within this sector and has grown rapidly over the past two decades.
Based on industry sources, an average of 50 films are released on a weekly basis and demand for Nollywood movies extends well beyond Nigeria. We understand that the film industry is one of the country’s largest non-oil exports. Furthermore, Nollywood is said to be the second largest employer in Nigeria after agriculture.
- The national accounts from the NBS show that the entertainment industry grew by 3.5% y/y in Q4 2017. However, we emphasize that this is from a very low base as the sector accounts for just 0.2% of total GDP.
- To support growth within the sector, the FGN granted most segments within the creative industries including Nollywood conditional access to pioneer status incentives. These include holidays from the payment of companies’ income taxes as well as withholding tax on dividends from pioneer profits for an initial period of three years. This duration can be extended by two additional years.
- Similar to other sectors of the economy, poor access to finance limits sustained growth across the film industry’s value chain. In H2 2017 it was widely reported that the FGN provided an N1.8bn (US$5.9m) grant to support the film industry via the “Project Act Nollywood” initiative.
Arts, entertainment & recreation, and GDP growth (% change y/y)
- We see the sector gaining more ground in the near future. There are on-going conversations around partnerships with the Norwegian and Korean film industries. Recently, Sony Pictures signed a three-year deal with Nigeria’s leading entertainment network to produce tv projects for global distribution.
- The industry is positioned to become a huge fx earner via export earnings. However, sizeable investments will be required to realize this potential.