Funding is the most critical component in growing any business, the entertainment business is no different. Entertainment entrepreneurs are the most disadvantaged of all Entrepreneurs in Nigeria because banks, Private Equity and Venture Capitalist Firms in Nigeria refuse to put their capital in the entertainment space.
A huge majority of Entertainment Entrepreneurs in Nigeria turn to illicit business people to get funding for their businesses or projects.
It’s time Financial Institutions (Banks, Private Equity and Venture Capitalist Firms) in Nigeria get involved in the entertainment business. The global entertainment industry is valued at over $2tr.
The Bank of Industry (BOI) is the only financial institution in Nigeria currently providing capital to Entertainment Entrepreneurs. BOI have given loans to a few Movie Makers for one off projects.
The effort of BOI is commendable but a huge majority of Movie Makers, Musicians, Entertainment Entrepreneurs and Entertainment Startups do not have the type of collateral needed to access capital from BOI.
I stand to be corrected but I don’t think BOI has given capital to any record label in Nigeria to grow its business, no Bank has.
Financial Institutions and the Federal Government need to provide Entertainment Startups and viable entertainment companies with capital to grow their businesses in exchange for equity.
The Americans, Qataris, Emiratis and Chinese have adopted this strategy and currently own equity in very successful multi million dollar entertainment companies.
Financial Institutions and the Federal Government have to invest in entertainment companies with an experienced management team and a great business plan.
Companies that are going to put out great content, create jobs, generate a great return on investment (ROI) and make an impact in the entertainment space for decades.
The Federal Government and Financial Institutions can create a lot of millionaires from this sector than any other in Nigeria.
Multi-million naira companies, multi-million dollar companies and a lot more naira and dollar millionaires also equates to more revenue from taxes for the Federal Government.
Financial Institutions (Banks, Private Equity and Venture Capitalist Firms) in Nigeria have dropped the ball in the past by not investing in entertainment companies, a great example is IROKO Partners.
IROKO is currently the world’s largest digital distributor of African movies. IROKO’s funding did not come from the Federal Government, any Bank, Private Equity Firm or Venture Capitalist in Nigeria but today IROKO is arguably Africa’s number one entertainment company with a market value in the hundreds of millions of dollars.
Tiger Global Management, a hedge fund in New York gave IROKO the capital it needed for its business.
Wealthy Nigerians, Financial Institutions and the Federal Government missed out on owning equity in a multi million dollar business that continues to grow.
“Fela The Musical” was another missed opportunity. Will Smith, Jada Pinkett Smith and Jay Z made “Fela The Musical” a reality with $11M. Fela grossed over $33M the 3 years it was on Broadway, a $22M return on investment (ROI).
Americans created, financed and made a great financial return on a Broadway project about our own. No Nigerian was involved in creating or financing “Fela the Musical”, isn’t that sad.
Just take a look at what our Musicians have accomplished. I have so much respect for Nigerian Musicians, they have done beyond amazing, selling their music and selling out arenas all across the world with no help from Nigerian Financial Institutions or the Federal Government.
Nollywood is doing beyond amazing as well, so much has been accomplished and Nollywood hasn’t even peaked yet. Nollywood is currently the 3rd largest movie industry in the world.
This feat was attained way before Bank of Industry (BOI) started giving out collateral backed capital to our Movie Makers.
Just imagine what can be achieved if the entertainment industry has the financial backing of Banks, Private Equity, Venture Capitalist Firms and the Federal Government.
Former President Goodluck Jonathan and the Former Coordinating Minister of our Economy, Mrs. Ngozi Okonjo-Iweala had great intentions to grow the entertainment industry but mistakes were made.
The stakeholders engaged by President Jonathan’s administration lacked experience in matters of finance, they were unable to properly articulate what kind of funding they wanted from the Federal Government.
$200M was set aside for the entertainment industry by Former President Goodluck Jonathan and Mrs. Ngozi Okonjo-Iweala.
The $200M sits at Nigerian Export and Import Bank (NEXIM Bank) but it’s almost impossible for any entertainment company to access capital from this fund. It’s actually a loan facility with more than a few stringent conditions attached to it.
The $200M was provided by the African Development Bank (AFDB) backed by a sovereign guarantee from the Federal Government.
The Buhari administration and the National Assembly need to thoroughly examine the books of NEXIM Bank in regards to this fund.
President Muhammadu Buhari and Vice President Yemi Osinbajo have commended the entertainment industry on multiple occasions for what has been accomplished thus far with no help from Financial Institutions and the Federal Government.
The Duo have also stated on multiple occasions that they are committed to helping grow the entertainment industry exponentially, it’s time to make good on that promise.
I am going to quote our Vice President “ We will not make promises that we won’t keep, we keep our promises”.
President Muhammadu Buhari and Vice President Yemi Osinbajo need to scrap the policy in regard to the $200M at NEXIM Bank. The $200M should be managed by fund managers who are experienced in the entertainment and equity finance space.
The $200M equity fund should invest in financially viable entertainment companies and Entertainment Startups with a great management team that will give the Nigerian Government a great return on its investment within 3 years.
Our Financial Institutions (Banks, Private Equity and Venture Capitalist Firms) should set up a similar structure as well, the entertainment business is lucrative and recession proof.
Nosa Eweka is an entrepreneur and a member of the Benin Royal Family, (email@example.com).