Earlier this month, colourfully dressed film stars and grey-suited asset managers gathered on the top floor of a Chinese car showroom in Lagos to discuss how to make money on movies.
Nollywood, as Nigeria’s freewheeling filmmaking industry is called, is a booming business. Hard figures are difficult to come by, but the country produces the second-highest number of movies in the world every year after India, and at least a million people are estimated to work directly or indirectly in the sector. Even widespread poverty and rising inflation haven’t dissuaded people from going to the movies, as ticket sales jumped 60% last year to 11.5 billion naira ($8 million), according to the Cinema Exhibitors Association of Nigeria.
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“We see Nollywood as an investment opportunity,” Folajimi Alli-Balogun, an assistant vice president and head of the film desk at MBO Capital, told the audience at the Lagos event. In addition to the industry’s explosive popularity at home, he noted, “there is a huge market for Nigerian films outside of Nigeria.”
MBO Capital is among the asset management firms ramping up investment in Nollywood after streaming platforms Netflix and Amazon Prime stopped commissioning original movies in Nigeria. While Nollywood productions tended to be budget affairs before the arrival of streamers, with movies sometimes costing as little as $35, 00 to make, the streaming giants changed the equation by lavishing filmmakers with money and distribution. While these companies will continue purchasing Nigerian movies, under the new model, filmmakers will get paid at the end — creating a financial gap that asset managers are eager to fill. And the more streamers offer to pay, the higher returns can be if production costs stay low.
Central to all of this are streaming contracts, Alli-Balogun explained. Financing films is dicey business even when budgets are as small as Nollywood’s, but a guarantee from a streamer to buy the film eliminates risk. Moreover, once a film is on a streaming platform, it can deliver residuals for the filmmaker (and their financiers) for years to come. A $500 000 investment in a Nollywood film, which MBO Capital typically makes through a combination of equity and debt, can yield returns “between 30 and 40%” on the equity side, according to Alli-Balogun. “There are not a lot of opportunities for us to earn those kinds of returns.”
Nigeria is Africa’s most populous nation, and the large and engaged viewer base that helped convince Netflix to launch a local streaming platform in the country in 2020 – and Amazon Prime to do so the following year — has only grown. Consulting firm PwC predicted in a 2024 report that the market value of Nigeria’s entertainment and media sector — currently expanding at an average rate of 8.6% a year — would balloon to $13.6 billion by 2028, a more than $4 billion increase from 2023, with movie tickets expected to account for about half that growth.
While Nollywood films used to be less popular than US ones, that’s changed in recent years as storylines have become more relatable. A large diaspora audience has also helped boost numbers. Outside the country, and particularly in the UK and US, Nigerians view Nollywood movies as a way to reconnect with their roots and keep their kids in touch with Nigerian culture.
MBO Capital released 10 movies it financed on Amazon Prime last year and it expects to release another nine this year. Its roster includes the dramatic films “Gangs of Lagos” and “Kill Boro,” and the sequel to the romantic comedy “The Wedding Party,” which broke box office records when it came out.
Comedies tend to do well, but generally “people will gravitate towards a good story,” Alli-Balogun said.
Still, despite all the growth, “it can be challenging getting funding,” said Lillian Olubi, who left finance to start her own production company, Gold Lilies Global Service, and bring her expertise to the industry.
That’s one reason why Lagos-based asset manager Chapel Hill Denham launched a $1.2 million initiative last year to provide funding and business development — and attract third party-financing — for entertainment and media. In an interview, Chief Executive Officer Bolaji Balogun said that “about 35 or 40%” of the funds raised will go to support future film development.
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Most Nollywood movies are self-funded, with producers relying on their own money or financial help from family and friends. Bringing in banks and asset management firms to provide private capital could move away from that dynamic, he suggested, and provide the industry with longer-term stability. “Because it’s so fundamental for so many of us to how our stories are told, it’s really important that domestic capital also participate,” he said.
With funding for film and TV still relatively difficult to secure, the hope is that private finance could ease pressures on filmmakers while guaranteeing asset managers safe — and hefty — returns.
The development could also change Nollywood in other ways, said Steve Gukas, a filmmaker who produced “93 Days,” a Nollywood blockbuster about the Ebola epidemic.
Gukas, who recently secured bridge funding from MBO Capital for a series he’s producing for Amazon Prime, said that working with private capital has advantages beyond just simply getting a check. “Sometimes as a creative, you can make decisions on what is ‘arty’ that do not make economic sense, so getting that guidance is also powerful for the industry.”
Others are waiting to see how things play out. “I think more experimentation needs to be carried out before the authentic and optimal formula for Nollywood funding can emerge,” said filmmaker Obi Emelonye, who has received funding from a bank for a production in progress. “But the financial sector is averse to risk which is inherent and dare I say, endemic in the film business.”
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