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Nollywood, quest for consolidation

By Steve Ayorinde

The controversy trailing the introduction of the new distribution framework for the Nigerian film industry should spur a healthy debate about the financial health of the sector.

The word that is now associated with the man behind the rumble, Emeka Mba, the Director-General of the National Film and Video Censors Board, is reform. I think the appropriate word should be consolidation. Considering the bigger picture, what is at stake is the financial health of this giant industry that is not quite acting its age. Since March 2007 when he took up the gauntlet for a good cause, Mba aim had sought primarily to encourage an industry that must be relentlessly open about its financial stature.

Rather than have as many mushroom film marketers as we do producers, the new distribution framework had devised a new regime of registration for a five-year licence for those that wish to operate on a national scale. But in so doing, it requires an evidence of seriousness or financial capability to the tune of N30m, either individually or as a group. Such evidence, in recognisable business sense, could be in assets, equipment, et cetera. A marketer could also produce evidence of an insurance bond for the remainder of the amount or the whole N30m. The sense in it, as I understand it, is to first appreciate the distribution arm of film production as the engine room of its economic mainstay, and then strengthen it in order to forestall the distant nightmare that may be the consequence of a profuse, unrestrained industry.

The vision from the Censors Board, I reckon, is to save Nollywood from the impending danger where there are more movies, mostly sub-standard, than capable distributors in a market that is not necessarily expanding. The template that Mba seems to be adopting is similar to his kinsman's, the Governor of Central Bank of Nigeria , Prof. Chukwuma Soludo, during the banking sector consolidation in 2006.

The familiar success story of the banking sector consolidation programme was, of course, necessitated by the pervasive weakness and uncertainty in the banking system, and the need to re-engineer and fast-track a system that will engender confidence and power a new economy. The way Soludo pruned down the number of banks from 89 to 25 and raised the stakes for investors and borrowers is, in a way, analogous to what Mba craves for Nollywood – foster the development of a healthy industry that can regurgitate production and partner with financial institutions .

The initial eruption of opposition to the framework was expected. Just like the initial opposition to the banking consolidation, where critics later turned ardent supporters of the exercise, the framework, if diligently implemented, may soon win over its adversaries. It should dawn soon that the Keynesian theory that worked for the banking sector applies to the business of film in the sense that money can stimulate expansion in aggregate domestic output.

The argument that unlike banks, film marketers and distributors do not hold public money in trust, and therefore should not be required to conform to government's idea of reform, lacks merit. Firstly, an institution such as the Nigerian Stock Exchange though may operate outside of government's confines, its functions are subject to regulations and even direct government intervention as we are currently witnessing with the downward trend in the capital market. Such an argument reinforces the weak excuse that since government has minimal involvement in the operations of the music, visual and literary sectors, the motion picture should also be left out of government's purview. What should be appreciated is not just the law backing the Censors Board's foray into film regulation, but also the importance attached to the 7th Art (Cinema) the world over.

The price of consolidation in the film industry is worth paying when the arithmetic involved is considered. With almost 2,000 moves released yearly on an average budget of N2.5m, we have a sector that invests not less than N5bn into production alone. If distribution per film is averagedly around 20,000 copies at about N300 per unit of a video compact disc (without cinema/box office releases for a few films) we are talking about an industry where N6bn was generated from sales in 2007 alone. Such an industry cannot be left to conjectures of panicky marketers alone.

I may subscribe to the idea of regional distributors, which in the banking sense will be like the micro-finance banks. But the gains of a fewer, solid, national distributors will be seen in fewer, quarterly movies that can earn money on a national as indeed global scale.