Concerns over access to NEXIM Bank’s $200m package for Nollywood, others

| September 17, 2012 | 0 Comments More

• Nollywood star Genevieve Nnaji (left) Hollywood star Isaiah Washington and Nollywood star Olumide Bakare on the set of Dr. Bello

Statistics released yesterday by the National Bureau of Statistics (NBS) show that the non-oil sector is contributing to economic growth. The nation’s film industry is believed to have the potential to help diversify the economy. This was why President Goodluck Jonathan created a $200 million (about N300 million) intervention fund for the creative and entertainment sector. But, almost two years after the fund was announced, only one film, Doctor Bello, has benefitted from it, writes Entertainment Editor VICTOR AKANDE

The figures are encouraging:

Nigeria’s economy grew 6.28 percent in the second quarter of this year and inflation fell for the second straight month in August. The GDP growth in Africa’s second largest economy accelerated in the second quarter, up from 6.17 percent in the first quarter.

According to statistics released yesterday by the National Bureau of Statistics (NBS), the growth is driven by non-oil sector.

“The non-oil sector was driven by growth in activities recorded in the building and construction sector, while oil sector output decreased (compared with Q2 2011),” the NBS said in a report.

This is despite the fact that oil accounts for more than 80 percent of Nigerian government revenue and around 95 percent of its foreign exchange earnings. It is in search of alternative sources of growth and foreign exchange that the Federal Government tipped the country’s film industry known as Nollywood.

The reasons for this are not far-fetched: In the last four years, it has consistently churned out over 2,000 films. In 2008, 2,408 films were produced; 2009 recorded 2,514 films; and 2,621 films were produced in 2010. Nollywood, as the industry is known, is ranked first in the world in quantum and third in revenue, with receipts over the years reported to range between $300m to $800m.

No wonder researches have taunted it as a viable non-oil sector money spinner for government.

But, it is generally agreed that for the industry to realise its potentials, the Federal Government must offer some stimulus. So, it was a good news when in November 2010, President Goodluck Jonathan announced his administration’s decision to offer a $200 million revolving loan scheme for the industry.

In about two months, it will be two years since the scheme was announced. But, players in the industry are raising concerns over access to the fund. Only one producer, Tony Abulu, has been able to access the fund from the Nigerian Export and Import Bank (NEXIM), one of the managers of the fund, for his film, Doctor Bello.

The film is billed for a world premiere at the John F. Kennedy Centre for Performing Arts, Washington, United States on September 27.

Some practitioners in the sector have questioned why Abulu, who resides in the United States, should be the first to access the Nigerian Creative and Entertainment Industry Stimulation Loan Scheme. Some have described the process, which they feel should be a grant, as too technical. Others believe the collaterals are cumbersome to meet.

Veteran filmmaker Dr. Ola Balogun believes the bank has a ‘hidden’ agenda. Balogun, in a piece entitled ‘NEXIM: What agenda?’ doubts the bank’s understanding of the industry to channel the fund properly.

Balogun said the interest of government in the art and entertainment sector can better be advanced through grants or film funds rather than a loan. He said there is no major nation in the world that conducts cultural policies by requiring artists and cultural workers to queue up in banks for loans.

He said in the United States, support for the arts is conducted through foundations and through state- supported entities such as the National Endowment for the Arts.

Balogun faults the requirement for artistes to be put through the rigour of filling a form for the purpose of a loan. He said artistes are not businessmen, vexed in such financial technicalities.

A former consultant to the National Film and Video Censors Board (NFVCB), Mr. Yinka Ogundaisi, said he was surprised when NEXIM unfolded Abulu as the first beneficiary of the scheme. He said: “I myself had issue with the same NEXIM when, to the consternation of all of us, they announced their funding support for the film, Doctor Bello by Tony Abulu.”

Ogundaisi said he later discovered that NEXIM had its valid reasons for opting to fund the film, adding: “despite any misgivings anyone may still have, we should at least praise Dr. Roberts Orya for doing something rather than sitting on the fence”.

He added: “NEXIM core mandate… is to promote indigenous Nigerian products for exports. The epidemic level of piracy now tormenting Nigerian movies has made it suicidal for any fund provider, especially a bank to commit their funds into either its production or distribution. Yet, NEXIM must find a way to achieve its core mandate, which was why according to the bank, they decided that if there is no indigenous Nigerian movie that can be safely promoted for export, they might as well create one as a model, hence their funding support for Tony Abulu’s film meant for distribution offshore, but all the same, a Nigerian product that NEXIM can associate with and tout as the evidence of achieving their mandate.”

But why is it difficult to access the fund?

NEXIM Bank’s Managing Director Roberts Orya said most Nollywood filmmakers could not access the fund because they lack auditable business structure. He said although the mandate of the bank is to generate inclusive growth, the project remains a loan scheme, which must yield returns. He said the total interest to be charged on any loan facility under the scheme is in single digit. These are charged on the basis of tenor and assessed risks which include 7.0 per cent – 7.5 per cent (under 2 years); 7.5 per cent – 8.5 per cent (between 2 years and 5years); and 8.5 per cent – 9.0 per cent (between 5 years and 10 years).

Orya said the question of why Abulu should be the first beneficiary is a mere sentiment that does not go well with business. He said: “Any company in Nigeria can benefit from the facility provided that it is legally registered / incorporated in Nigeria; operates in the entertainment and creative industry; not owned by government (federal, state or local); and it is not an oligarch business interest that may interfere with content policy for its own interests.”

He noted that there is a gross violation of intellectual property rights, resulting from ineffective Intellectual Property laws. He highlighted other challenges, which include low production for theatrical releases and cross-border co-production arrangements; lack of adequate digital production and distribution infrastructure to exploit the new media and digital distribution platform; inefficient / unstructured distribution marketing outlets both domestically and internationally; poor corporate structure and book-keeping culture; and inadequate exhibition / theatrical infrastructure, which, he said, is 0.36 screens per million populations.

Nigeria has less than 60 modern screens in multiplexes located in five cities, compared to India’s over 13,000 screens translating to 12 screens per million people.

“This is partly to address the historical reluctance of Nigerian banks to engage the segment by showing that FGN credits, properly channelled to the segment, can be serviced and repaid thus hopefully setting a precedent that banks will directly adopt as their liquidity positions improve,” he said.

Ogundaisi said he has also discovered that the inability of players in the industry to write viable proposals has made access to the fund difficult. Unlike Balogun, he sees nothing wrong in artistes writing proposals. He said: “All they (NEXIM) require is a viable business proposal. Now, this is a challenge that I believe we should focus our attention on and for now. I am aware that proposals on infrastructural development which require their funding support is already with them to study and react to. I would suggest we allow the next few weeks to indicate whether Dr. Orya’s public pronouncements to support all viable business proposals in our creative/entertainment industry are for real or just another way of politicking.”

Significantly, NEXIM, a co-manager of the fund which also has the Bank of Industry (BoI) holding the domestic investment edge, said it is committed to helping grow the industry. It said more moviemakers would benefit from the revolving loan. Orya said the fund represents a significant commitment by the Federal Government to the creative segment of the economy. And that partnering with the beneficiaries, not only pave the way for the presence of a broader international market, but also puts to rest, insinuations that the fund is open only to box office heavy weights.