Analysts upbeat on Nollywood’s retail, large investors’ attraction 

• Seen to bring in younger generation

• Nigerian entertainment to reach $14.8bn in 2025

Temi Popoola, managing director and chief executive officer of the Nigerian Exchange Limited (NGX), recently identified the domestic entertainment sector, Nollywood, as a potential driver of increased retail investor activity in the capital market.

Popoola made the remark during the closing gong ceremony marking the final trading day of the year, which also celebrated the achievements of Richard Mofe Damijo (RMD), the chief executive officer of RMD Productions and a Nollywood stalwart.

The NGX chief attributed his statement to Nollywood’s ability to engage and appeal to Nigeria’s younger generation. Popoola believes that Nollywood, which is one of the top three largest movie industries in the world, can help to increase the number of retail investors in the country and foster financial inclusion.

“Nollywood plays a critical role in selling the Nigerian economy and can help to catalyse increased retail investor activity by educating the younger generation to further crowd them into the market,” he noted.

In addition to its ability to increase retail investor activity and promote financial inclusion, Popoola stated that Nollywood stakeholders can leverage the capital market to raise the capital they need to fund their businesses and projects. This, in turn, can deepen the synergies between the creative sector and the capital market, creating a mutually beneficial relationship. 

He sees this as a crucial step towards furthering the development of the Nigerian economy and improving the country’s overall financial well-being.

Damijo echoed Popoola’s sentiments, emphasising the importance of collaboration between the business community and the creative sector. 

The veteran actor believes that both sides have much to offer each other and that working together can significantly contribute to the growth of the Nigerian economy. 

He noted that other countries that have been successful in promoting their economies on the international stage have done so by incorporating their art and culture. 

This, according to Damijo, can be a valuable tool for Nigeria in its efforts to attract foreign investment and stimulate economic development.

“We cannot promote Nigeria or attract foreign investment without integrating our art and culture into it,” he argued.

Given the tremendous potential of the Nollywood industry to generate revenue for Nigeria’s economy, stakeholders in the capital market have been calling for greater integration between the two sectors. They believe that this would not only deepen the capital market, but also provide much-needed funding for the country’s rapidly growing entertainment industry.

Many believe that the potential for this collaboration is significant, and that it could help to boost Nigeria’s reputation as a major player in the global entertainment industry.

The call for greater integration between the capital market and the Nollywood industry was intensified at a 2023 workshop organised by the Capital Market Correspondents Association of Nigeria (CAMCAN). The theme of the workshop, “Leveraging Capital Market in Financing the National Development Plan,” explored ways to harness the potential of the capital market to finance development projects in Nigeria.

During a panel discussion at the event, Folagbade Adeyemi, head of ecosystem integration at VFD Group, noted that despite the limited funding available to players in the media and entertainment sector, they have been able to deliver high returns and garner global recognition. 

He added that, with the right support and funding, the sector has the potential to become a major contributor to Nigeria’s GDP. He also highlighted the need for greater collaboration between the private sector and the government to create an enabling environment for the entertainment industry to thrive.

He said: “There is a section of the economy that has been delivering high growth, but has been fully excluded; entertainment and media. Recently, a movie, Black Book, came out. It was one of the highest-viewed movies on the streaming platforms across Nigeria, across Africa and globally. We were invested in it.”

Adeyemi further stated that, when compared on a per capita basis, Nigeria, South Korea, and India have some of the highest values in the movie industry. He explained that, despite having a low level of investment per capita of about $15, Nigeria has the highest compound value at the moment, whereas India and South Korea have values of $45 and $30 per capita, respectively. 

He went on to say that these nations are leading hubs of entertainment and media, and not only do they produce products, but they also have significant value chains.

Adeyemi further pointed out that while there is potential for growth in the entertainment industry, Nigeria has not yet created the necessary structures to support this growth. He emphasised the need for the capital market and its participants to build the structures that will drive the entertainment sector forward. Without these structures, he warned, the country will not see significant returns on its investments.

The experienced securities trading and operations professional also called on regulators to develop the framework that would facilitate the growth of the entertainment industry. He stressed that the capital market must take the lead in developing structures to support the sector. 

He went on to say that, while the regulator’s role is to create a framework for safety and structure, the actual structures must be created by the market itself. He cited the West and the East as examples, noting that different structures can be used to drive entertainment into the market. 

According to him, the market has a crucial role to play in providing these structures, which the regulator can review, endorse, and ultimately promote.

To provide financing options, Adeyemi outlined two potential approaches: using a fund-type structure or a securitisation framework. Under the fund-type structure, assets would be securitised based on the royalties generated by the entertainment sector, while a securitisation framework would involve issuing bonds to finance the sector. 

He added that the main issue is that this sector of the economy has not been fully integrated into the core of the economy. He cited Vice President Kashim Shettima’s recent comments on the disconnect between the entertainment industry and the economy and his promise to bridge that gap.

In response to Adeyemi’s remarks, John Briggs, the deputy director of the securities and exchange commission’s Lagos zonal office, said the commission was open to providing a regulatory framework for the media and entertainment sector. Briggs stressed the importance of this sector to the economy and the need for proper regulation to ensure its continued growth.

The Nigerian Entertainment Conference (NECLive) recently released a report showing that the Nigerian entertainment industry is expected to reach a revenue of $14.82 billion by 2025, a significant increase from the $4 billion generated in 2013.

The report, titled “Growth, Trends, and Opportunity in the Nigerian Creative and Entertainment Industry”, was compiled by NECLive, an entertainment research organisation. It was based on the Africa Entertainment and Media Outlook 2023-2027, a study by PriceWaterhouseCoopers (PwC), a global leader in accounting and business transformation.

The report also examines the evolution of the Nigerian creative and entertainment industry over the past decade, highlighting the opportunities and challenges ahead. The film sector, in particular, has seen significant growth, with the number of films produced and distributed increasing from 1,800 in 2013 to 2,500 in 2022. This growth has positioned Nigeria as the second-largest film producer in the world, with an estimated value of $6.4 billion.

According to NECLive founder, Ayeni Adekunle, the Nigerian entertainment industry has undergone a significant transformation over the years. He noted that with the growth of the internet and the emergence of streaming services, the industry has seen a dramatic shift, with artists, managers, producers, directors, and labels thriving in an increasingly structured and globalised market.

According to Adekunle, the increased international recognition of Nigerian films must be capitalised on to further improve the industry’s global standing. To achieve this, the industry must improve its structure and develop better financing tools to support its growth and expansion. 

He noted that the industry is already seeing significant investment from local and international investors, but more needs to be done to ensure that this capital is directed toward projects that will help propel the industry forward. 

He called for a more coordinated approach to financing and marketing Nigerian films in order to maximise their potential in the global market.