As part of its Creative Nigeria Series initiative, Alliance Law Firm organized its first installment i.e. a Roundtable event, which focused on the film sector on Friday, 23rd August, 2019 at the conference room of its office in Ikoyi, Lagos. The theme was “Financing and Protecting the Creative Industry in Nigeria – The Film Sector in Focus”. From an Alliance Law Firm perspective, the vision of the series is to influence policy reform and solution-based interventions in the industry, as well as contribute towards the socio-economic well-being of her community through socially responsible causes.
The essence of the forum was to introduce solution based recommendations for the creative industry. It focused on interrogating the topic and build a clear consensus and path to accessing funds in the creative industry. Amongst the panelist at the forum were: Ms. Uche Nwuka from the Bank of Industry represented by Mr. Promise George; Mr. John Asein, DG Nigerian Copyright Commission represented by Ms. Alphaeus Lynda; Mr. Rotimi Salami; Mr. Lancelot Imasuen; Dr. Don Pedro Obaseki; Mr. Mahmood Ali-Balogun; Mr. Humphrey Oriakhi; Mr. Tchidi Chikere; Mr. Abubakar Bello, MD, NEXIM Bank represented by Ms. Julia Ojo; Mr. Osaigbovo Omorogbe; Mr. Simeon Okoduwa as the moderator; Uche Val Obi, SAN as the chief host of the event.
Mr. Chikere shared his experience relating to the challenges in financing the creative industry, particularly in Nollywood. He noted that with a 20 years’ experience in the industry as a film maker, he observed that there was a fallacious conjecture that investment was the fundamental problem in the industry; he however noted that the problem was with the distribution in the industry. He was able to posit that there was a willing audience in the industry but this audience had not been successfully turned into cash. He also noted that the industry had not been able to tackle the problem of infrastructure. Another problem he noted is that proceeds and profits are not being realized from investments in the industry.
While speaking, Mr. Imasuen noted that the problems identified by Mr. Chikere were similar to his. He insisted that infrastructure and facilities were a deficit; he noted that 97% of producers do not realize their profits from investments. He was able to fault these problems to the non-deliberate or orchestrated move by the government to ensure the corporate nature of the industry through its policies. He noted that on the average, most investors in the industry do not break even. He emphasized that the works of industry practitioners shows its fruits, and that the problems of the industry should be thoroughly understood before solutions are proffered. He noted that investors such as finance organizations do not understand the problems of the industry which they ought research properly.
Dr. Obaseki affirmatively asserted that the challenge of financing in the industry is caused by the Industry itself. He noted that there was no industry in the creative industry due to the lack of its schematic and deliberate progression. He said the industry had already become an all-comers affair due to its lack of structure. He noted that the government is not ready to take steps and that practitioners in the industry have failed to establish its revival. He recommended that there should be a systemic dismantling of the industry for a rebirth and to protect investors.
He emphasized that the business of movie making is not the same with the art of movie making, and producers should not be in the art of movie making. He said that producers should only be responsible for aggregating the factors of production for a movie, and directors should be employed as independent practitioners. He was able to note that the current associations of movie producers are a fold of people who should be directors. He added by saying that cinemas occupy 0.6% of the market place which in itself is low.
He also noted that banks and financiers are lackadaisical in conducting due diligence, as most give interventions without doing environmental scanning; he noted that global standards should be maintained. He advised that financiers should exploit the cinematic process as the cinemas are the main distributors where return on investment could be generated. In his statements, he mentioned that the industry should be about the real estate and not the movies produced, and that there should be a paradigm shift in investment, as financiers should desist from the trends of social media and focus on the big issues a hand.
The invaluable contributions of Mr. Ali-Balogun could not be set aside as he noted that the industry’s landscape had changed over the years, and that avenues to exploit it had changed. He emphasized that in the past there was only one singular way of exploiting this but the age had brought new opportunities. He said that a reentry of the cinemas had gingered a lot of interest in the industry, as it had begun to get some degree of appreciation all over the world.
One important challenge he was able to note was the rise of corporate baggers in the industry. He noted that there is a need to restructure and regulate creative practitioners. He noted that there is no code of conduct as the current guilds are toothless bulldogs which has resulted to anarchy in the industry; he recommends a law that would ensure professionalism in the industry be passed; he noted that this law will ensure the industry is regulated as a whole. He explained that he had been in the process with other practitioners to establish the Motion Picture Council of Nigeria; however, the process had been involuntarily suspended.
He noted that there is a need for policy intervention to attract foreign direct investment; and there is a huge disconnect between the Nigerian government and foreign governments to protect the industry. He noted that corporate organizations need to advocate for these policies to be made and implemented.
The representative of NEXIM Bank expressed that the bank was charged with the responsibility of ensuring that foreign exchange earnings are realized from the industry; however, she reiterates that the challenges in the sector is that most investors did not yield returns. Mr. Obaseki alleged that part of this problem was due to the bank investing in personalities that were not worthy in credit and character. The bank noted that it did not give grants but loans which were expected to be repaid. NEXIM bank also agreed that the lack of structure in the industry is a major bane.
While the Bank of Industry has been a major part of the evolution of the industry; some panelist noted that the conditions for collateral laid down by the bank were stringent. Speaking through its representative, Mr. Promise George, he noted that the bank’s intervention funds for the industry: NollyFunds were very liberal. However, the bank was able to identify that character of practitioners and distributions in the industry were major challenges for securing loans with the bank. Mr. Obaseki in the course of the event appreciated the bank for its great initiative for intervening in the industry as it is one of the most bankable, but that the initiative is doomed to fail due to the Nigerian factor of despotism which destroys the intention of the initiative. He alleged that the bank gives its loans to people with corrupt backgrounds.
Mr. Ali-Balogun noted that the Bank of Industry gives conditions that are stringent. He categorically stated that less than 20% of the NollyFunds had been successful. Amongst these conditions were that the bank insisted that the practitioners must use the bank’s facilities which he sees as a problem; he asserted that even the Bank had come to realize that the NollyFunds is a failure.
As per the CIFI initiative of the Central Bank of Nigeria, it was hinted that the stringent conditions inhibited access of funds due to the nature of the collateral which placed more emphasis on property rather than cash flows. However, the Mr. Omorogbe, noted that whether it is appreciated or not, cash flows were the primary considerations when commercial banks give out loans, and the need to protect risk was why the banks request for properties as collateral; he also noted that the lack of structure in the industry is also a problem. He also hinted that a lot of financiers do not have a lot of confidence in the practitioners due to their lack of track record. On this point, Mr. Ali-Balogun, believed that the evaluation of track records is not feasible as practitioners earn in trickles and are not traders whose track record can be evaluated, he suggested that fiduciary laws need to be amended, by way of a paradigm shift.
Beyond going to commercial banks for loans to fund the industry, Mr. Oriakhi noted that financiers should begin to invest in intellectual property, and that the greatest problem in the industry is copyright infringement and its lack of structure. Mr. Salami advocates for good contents when producing movies; he advised that goodwill is a way to alternative funding.
The Chief host, Uche Val Obi, SAN noted that for practitioners in the industry to gain access to the funds from financiers, he expressed that practitioners must have the right entity to gain access to these funds. He said that business must conform to corporate identity; as well as instill minimal level of governance; keep financial accounts and diagnostic audits. He noted that finance houses are not the only places where industry practitioners can leverage upon, as there are concessions on tax incentive provided by the Nigerian Investment Promotion Council; practitioners should also position themselves for collaboration in business; he also noted that projects should be de-risked if all cost elements have been identified; practitioners should also ensure that they engage the right professionals who will enable them get their business running. He also noted that there are no mechanisms to attract foreign direct investments (FDI) for the industry.
The representative of the Nigerian Copyright Commission (NCC) while speaking on how to protect the industry from pirates, Ms. Lynda noted that the NCC is taking proactive enforcement on piracy. She noted that banks and finance houses should understand the importance of IP and how they can get return on investment from 15 years after the death of the practitioner.
After the robust deliberations by a star-studded cast of panelists drawn from the financial services sector, film makers and producers, industry experts, academicians, intellectual property rights lawyers, industry regulators, collective management organizations and the media, the Roundtable was able to build consensus around the issues in its communiqué, that:
- The creative industry has established itself as a major contributor to the socio-economic development of several nations of the world, especially in key areas such as foreign exchange earnings, foreign image profiling and employment.