Hooray for Nollywood

Correction appended, Aug. 30.

You have to go to Alaba market in the chaotic metropolis of Lagos. It’s where the country’s film industry, Nollywood, was born over two decades ago—not that most of its stars would set foot there today. You can’t blame them. Getting to West Africa’s largest consumer-electronics market requires a three-hour drive from Victoria Island, where many stars and producers live, to the mainland, in standstill traffic on a potholed highway that varies between pavement and dirt. Once at the perimeter, it’s another two hours’ walk into the DVD section, so visitors in a hurry must hitch life-threatening rides with boys on motorbikes, speeding along the narrow market streets through a sea of bodies selling anything and everything: extension cords, plantain chips, porn, cassava, washing machines—and black-market DVDs. Everyone is looking for an angle. A woman hawks used plastic bags to another woman who fills them with grain and resells them. Two young men stand guard over a 2-m-long board thrown over an open ditch and force people to pay a toll to cross their makeshift bridge.

Once inside, different layers of the Nollywood economy unfold, layers that mirror the complexity, corruption and entrepreneurial energy of Nigeria as a whole. There’s a young man, one of many, who has traveled 80 minutes from his part of the city to buy locally made movies, sold on DVDs for 50 to 85 naira (about 30¢ to 50¢). He will sell them in a stall at home for 100 naira (about 60¢). But what’s striking is that the pirated versions of foreign films, like 12 Years a Slave, sell for just 35 naira (20¢). That’s considerably less than the local stuff, which is a tawdry mix of action, romance, gospel, soft-core porn and horror, mixed in with the occasional tribal drama. Distributors, many of whom are local thugs or the filmmakers themselves, take the movies, make copies of them (legitimate and otherwise) and sell them from warehouses behind the market stalls to buyers both big and small from all over—Ghana, Kenya, the Caribbean, the U.K., the U.S., everywhere.

To call Alaba a sharp-elbowed place is an understatement. (A few years ago, armed distributors chased out military police and filmmakers who’d come to complain about pirating.) But it’s a place where an ambitious person can rise quickly—like 22-year-old Tochukwu James, who sits wrapping DVDs in cellophane in a market stall. James had no money for college, so after secondary school, he took a series of odd jobs before ending up here, in Alaba. “I’m going to save my money, and one day I’ll open my own stall and eventually make films like this,” he says, pointing to the DVD he is wrapping, which features a low-budget drama about a family-inheritance squabble. “You have to be tough here. But I’m going to make it. I’m going to be a Nollywood boss.”

The story of Nollywood is the story of the Nigerian economy—and even of Africa itself. It’s about sheer entrepreneurial will overcoming an array of obstacles, from inept governance to corruption and crime, to the lack of basics like power, roads and even proper water and sewage. After years of treating the continent as a place of unending misery, the Western press has been touting the optimistic story about Africa, with reason—six of the world’s top 10 fastest-growing economies are here, and Nigeria is first among them. It’s got just over 7% growth, huge oil and mineral resources, and a GDP that recently jumped by 89% thanks to a recalculation by Nigerian authorities to better include sectors like telecom and entertainment, the latter dominated by Nollywood. The larger size of these areas reflects huge consumer-spending potential and a growing middle class.

It also has systemic corruption at every level. Forty-six percent of Nigeria’s 173.6 million people live in poverty, 18% of children are not in education, and life expectancy is just 52 years—the 11th lowest in the world. Then there is a total lack of security, as tragically evidenced by the number of fatal terrorist attacks doubling from June 2013 to June 2014 compared with the same period last year, and the kidnapping by Islamist terrorist group Boko Haram of over 200 girls. (Some of those girls are still being held, months after their capture, in a remote bush area in the north of the country, with almost no real effort on the part of the Nigerian government to rescue them.)

Nollywood films don’t shy away from documenting many of the daily struggles of Nigerians—the violence, the poverty and the social disruption as Africa urbanizes. But the movies also showcase their dreams—dreams that have a grounding in reality. Post–GDP “rebasing” (which means updating the way GDP is measured), filmed entertainment now represents 1.4% of the economy, over $7 billion, which is a conservative estimate, given that it doesn’t include the vast black market. That’s huge for an emerging economy—all of America’s creative industries put together represent just over 3% of GDP. And it’s likely to grow faster now, as a crop of returning expat entrepreneurs prepares to transform the industry by taking it digital.

The question is whether the Nigerian government, which can’t provide a reliable national grid system, protect intellectual property, curb corruption or even protect many of its citizens, may itself be the biggest roadblock to the success of the industry—and the country. “Entertainment could be as important a business in Nigeria as oil,” says Yewande Sadiku, chief executive of Stanbic IBTC Capital Limited in Lagos, who recently produced Nollywood’s highest-end film to date, an adaptation of Chimamanda Ngozi Adichie’s novel Half of a Yellow Sun, which features international names like Thandie Newton and Chiwetel Ejiofor, the star of 12 Years a Slave. “But the government made a decision to invest in oil. The film business here has succeeded in spite of the government.”

Lights (Sometimes), Camera, Action

there was film in nigeria before there was Nollywood. Nigerians like the art-house moviemaker Tunde Kelani were creating serious films here in the 1970s. (In 1970 the African-American filmmaker Ossie Davis directed the movie Kongi’s Harvest in Nigeria.) “Nigeria has always had a tradition of traveling theater,” says Kelani. “Yoruba theater troops used to travel from village to village to perform by order of local leaders. That performing-arts culture just migrated to radio, television and now film. Nigerians love storytelling in any form.”

But the high-volume, low-budget, straight-to-video industry that we think of as Nollywood began in another traditionally Nigerian way—through trade. Sometime in the 1980s, a group of Alaba market traders went to Europe to see what discarded goods they could pick up and hawk back home. They came back with a bunch of discarded VHS tapes, which they soon figured out would sell for more if they put a bit of cheap local content on them. Since Nigeria had almost no stand-alone cinemas (even today, there are only 15 in a country of 173.6 million people) or mass-market content geared at locals, the tapes quickly became gold. An industry was born.

It’s easy to make fun of Nollywood movies, with titles like Occult Sacrifice and Educated Housemaids, which, of course, is the much awaited sequel to Authentic Housemaids. But there’s a reason the industry has, until now, remained low end—it literally lacks power. Spotty electricity service is the biggest impediment to doing business in Nigeria. It affects everyone—from Nigerian industrial magnate and Africa’s richest man Aliko Dangote, who finally spent $1.2 billion to build his own grid system to overcome repeated blackouts, to small filmmakers and producers of Nollywood. The government and private companies control a grid, which runs haphazardly at best—sometimes because of poor infrastructure, other times because power gets diverted to choice areas. Either way, it means people have to buy generators and diesel to keep the lights on reliably. Most Nigerians spend around 40% of their take-home pay creating their own power, while some supply their own water and repair their own roads. Because it would be unfathomably expensive to power a real studio, many filmmakers work from home—which means the light and sound quality of Nollywood films tends to be poor at best. Actors shout over the whir of generators, in the living rooms and kitchens of the filmmakers themselves. Amateur quality means you can’t charge professional prices for content, or pay for better talent, which creates a self-fulfilling cycle.

Ehizojie Ojesebholo, a British-educated Nigerian who returned home to start Ceroms Media Productions, creates his films at his home in the Surulere district of Lagos, amid exercise equipment, pictures of his family and his children’s schoolbooks. (He often drafts his children as extras, which might represent the ultimate in cheap labor.) “I came back after studying film in the U.K. because I wanted to help make higher-quality films here,” says Ojesebholo, whose most recent production, Stopping Kloe, is about the existential crisis of a woman who desperately wants to leave Nigeria and move to the U.S. While it’s one thing to dream of creating better movies, it’s another to try to produce them amid Nigeria’s dysfunction. In the middle of making his movie, Ojesebholo’s generator blew out. He bought a new one the next day, but it was stolen by one of the neighbors. (He hired the local vigilante police to find it; the real ones never come.) “I just sat down and cried,” he says. “If the government would just provide 24-hour power, we wouldn’t have to go through all this.”

But Ojesebholo’s production woes were just the start. A day after 50,000 copies of his movie were released in Nigeria, Ojesebholo got a call from someone in Greece who’d already seen the film—via a black-market tape. The same Alaba distributors who’d released the legitimate copies had also put 100,000 black-market copies into the market. The $5,000 in profit he’d hoped to make on his $10,000 investment was gone. Now he’s looking to get into animation, aiming to create a series for children that can be sold to television, circumventing the piracy problem. “I had the concept for a Nigerian superhero, based on the governor of Lagos,” who is perceived to be a can-do reformer, at least by Nigerian standards. “He’d fly around the country, solving problems and showing people things can be done better.” So far, the idea hasn’t made it past government censors.

“I Better Pass My Neighbor”

despite the problems, the nigerian film industry is nothing if not aspirational. Nigerians have a phrase for keeping up with the Joneses: “I better pass my neighbor.” The term embodies the spirit of hustle, the striving energy that infuses the entire country and Lagos, its largest city, in particular. On Victoria Island, a growing ecosystem of stars, minders and hangers-on gather nightly at clubs, preening for the paparazzi. At a recent Nollywood party in the Lekki district of Lagos, sponsored by MTV and Absolut Vodka, starlets arrive in their international uniform—platform heels, false eyelashes, skintight dresses and knockoff designer handbags.

Lekki is an appropriate location for a Nollywood soirée, as it is in many ways the New Jersey of Lagos—a place for strivers. Indeed, there’s even a hit Nollywood series called Lekki Wives, a takeoff on the Desperate Housewives theme. Kiki Omeili, a 30-year-old actress who studied medicine, went for her first professional casting call in 2011. She now plays a Lekki Wives character named Lovette, a village girl who’s finally made it, having married a rich financier, but who gets carried away with her new wealth and ends up having a series of self-destructive affairs. (Nollywood movies are full of dark moral lessons—particularly for women.) Omeili has just finished Season 2, during which all the actors “camped” in a hotel together for four weeks to avoid commuting in Lagos traffic, which can only be described as epic. “We did the series just for the Nigerian market, but it’s catching on abroad now too,” says Omeili. “We had premieres in London and Manchester.” The popularity among Nigerian expats and the Afro-centric market abroad (which includes tens of millions of people) is one reason Season 2 was done on a much higher budget, with production quality that rivals that of a Western soap opera.

Indeed, there are now a spate of Nigerian expats who have returned home with the aim of professionalizing, internationalizing and cashing in on the burgeoning business of Nollywood. Chief among them is Jason Njoku, a British-Nigerian expat who has become the first in the industry to garner major Western venture-capital funding. His startup, iROKOtv, has become the largest digital platform for on-demand Nollywood content. Always entrepreneurial, Njoku had started a print-publishing venture during his time as a student at the University of Manchester in England—just in time to see the world go online. In 2009 he was broke and had moved back to London to live with his mother, when he noticed a shift in her video-consumption patterns. “She’d always watched British soaps, like Coronation Street or EastEnders,” he says. “But suddenly, she was watching these Nigerian videos all day.” Around the same time, a Nigerian musical act sold out a major stadium in Britain. Njoku sensed an opportunity. He jumped on a plane, headed to Alaba and picked up hundreds of videos. “I paid about 200 naira for each, and the distributors thought they’d stolen from me. I thought it was gold.”

While he could do a brisk business in DVDs, Njoku realized that the future lay in digital content. He persuaded YouTube to give him a partnership, which allowed for 50% revenue sharing. The day after, he moved back to Lagos. Within six months, he had 1.3 million users and was making $50,000 a week in revenue. Soon after, he raised funding from the New York City–based hedge fund Tiger Global to build a worldwide video-on-demand platform, iROKOtv, which now has $5 million a year in revenue. What’s surprising is that the user base is mostly outside Nigeria, since the poor telecom infrastructure in the country makes it difficult for people to get reliable broadband. (Monopolies mean that prices, which range from $30 to $100 a month, are also too high for most Nigerians.) “We have more people watching in London than in Nigeria, which tells me that all of our growth is ahead of us,” says Njoku. “It will take a long time, but as more consumers come online, it will force the system to change.”

Already, the amount of revenue that Njoku is bringing in means he can start circumventing Alaba and go directly to filmmakers, paying them to create better content, which then brings in more viewers. “I can’t go into Alaba anymore,” he says with a laugh. “It’s too dangerous for me!” Still, he adds, “we have to respect what they’ve created. Nollywood is a miracle. It’s financed entirely by private individuals, who were marketers and traders first.”

The next stage of evolution for Nollywood is to professionalize the financing of films to allow for the kind of large budgets and creative professionalism that high-quality cinematic productions need. Yewande Sadiku, who raised 70% of the equity not only from wealthy individuals but also from banks and other institutions in Nigeria to make Half of a Yellow Sun, Nigeria’s biggest-budget film to date, is doing just that. Sadiku became interested in film as a sideline to her investment-banking day job in Nigeria. In 2010 she won an Eisenhower fellowship to study film financing in the U.S. She soon realized that the gray nature of the business in Nigeria—there are no formal distribution channels and few records of sales—was making it impossible to bring real money into the industry. Using her connections and a business plan based on her best guesses of what the market would yield, Sadiku raised the funding, hired big-name stars and began filming at Nigeria’s one major studio, in the southeastern Cross River region, a pet project of a farsighted ex-governor that had never been used until then. The film, which was shown at the Toronto International Film Festival and debuted to critical acclaim in the U.K., rolled out in 40 U.S. cities on May 16.

Yet getting the film shown in its target market, Nigeria, took months (it debuted Aug. 1). In an example of the sort of Kafka­esque governance that’s commonplace here, a Nigerian state bank helped fund the film, but censors at first refused to let it into the market, saying its setting during Nigeria’s civil war would incite violence (censors eventually relented after producers agreed to cuts of the most sensitive bits). “It’s absolutely ridiculous. We’re having violence in this country already!” says Sadiku. “Imagine if you couldn’t talk about the Vietnam War? It’s so irresponsible of the government [to delay the showing of the film], not only culturally but also from the standpoint of encouraging future investment in the entertainment industry in this country. If investors believe there’s a risk that things can’t be shown, they will be scared away from putting money in big productions.”

Sadiku is now in discussions with the government about speeding up the privatization of the power industry (which she is consulting on) and bringing the film industry out of the back alleys of Alaba and into the daylight economy. “The government should make these people register and pay taxes,” she says. “Sure, they’ll protest, because it’s a cost. But they probably pay more already in informal taxes, bribes to police to look the other way, all sorts of things. If they were brought into the light, they could become not only legitimate distributors but also formal film producers and financers. The entire industry would grow. There has to be an education process.”

Undeterred by the censorship drama, Sadiku dreams of someday making an even more provocative project. “I’d love to make a documentary about the civil war—and not a gentle drama, but a take-no-prisoners, Hotel Rwanda–style production. We’re going to fight, and we’re going to change things in this country.” As the film industry itself proves, it’s never a good idea to bet against an entrepreneur with ambition in Nigeria.

Correction: The original version of this story incorrectly described actress Kiki Omeili’s education history. She graduated from the College of Medicine at the University of Lagos, Akoka, in 2006.