Why Nigeria’s film industry must move from opaque financing and budgeting structures to transparent, legally sound, and investment-ready productions.
In 1992, Kenneth Nnebue made Living in Bondage on a reported shoestring budget of about ₦150,000. The film went on to sell hundreds of thousands of VHS copies and became an unprecedented commercial and cultural success, launching the industry that is widely known as Nollywood. More importantly, it demonstrated something that would fundamentally change the Nigerian entertainment scene : local films and content could be commercially viable.
More than three decades later, Nollywood has grown from a largely informal home-video industry into a global entertainment powerhouse, churning out thousands of titles, forging major production companies, and attracting international distributors and streaming platforms. Its titles now compete for audiences at home and abroad, while the domestic box office has become an increasingly important source of revenue.
It is important to note that Living in Bondage did not emerge from a sophisticated studio financing system, a private equity fund, or a slate-financing arrangement but from an entrepreneurial ecosystem in which producers, traders and distributors understood the Nigerian market and were willing to take risks on local stories that helped birth Nollywood. That lacuna still exists.
Nollywood has evolved faster than the financial and legal infrastructure supporting it, and the industry is now attempting to execute global commercial strategies with financing structures, documentation practices, and investment data that in many cases still resemble the informal ecosystem from which it emerged.
THE ALABA MODEL
Before Nollywood became the commercial machine it is today, financing a Nollywood film was relatively straightforward. A filmmaker could rely on personal savings, money from family and friends, informal loans or small private contributions. Production budgets were comparatively modest, and the same ecosystem that produced the film could often distribute it.
Then came the Alaba model Traders, particularly those operating within the Alaba International Market, became some of the most important financiers in the early Nollywood economy. A producer with a story and a concept could approach a trader who understood the market and believed the story could sell. The trader would provide upfront capital, sometimes running into millions of naira with little or no documentation, in exchange for exclusive distribution rights and control over the sale and circulation of the finished film. This capital was an investment with the trader effectively betting on the ability of the film to generate commercial returns and because the trader was taking the financial risk, he could also influence elements of the production, including casting, storylines, and genres that were considered commercially attractive.
The model proved remarkably efficient and solved the problem of finance and distribution and meant that Alaba was simply not a distribution hub but in many ways the first informal capital market for Nollywood. But that model would eventually change.
As Nollywood matured the commercial ambitions of filmmakers changed. Production costs skyrocketed, and there was a need for advanced cameras, larger casts, sophisticated post-production techniques, premium shoot locations, advanced marketing, international distribution, and higher talent fees, and these pushed budgets upward. The economics had fundamentally changed, and a ₦500,000 production that could survive on personal savings and relationships built through simple handshakes and the Alaba Model could no longer scale and gave way to budgets exceeding hundreds of millions.
THE RISE OF NEW FINANCIERS ON THE NOLLYWOOD SCENE
The Alaba model eventually gave way to more institutional forms of financing as Nollywood began attracting international attention and demonstrating its commercial potential at the box office. As the industry grew, financial institutions increasingly began to recognise that there was money to be made from investing in successful Nigerian films. The Bank of Industry (BOI) was among the earliest institutions to treat Nollywood as a fundable sector, providing low-interest financing to filmmakers and producers who had demonstrated some level of commercial success in the informal market. Films such as The Figurine and Flower Girl, which enjoyed commercial success around this period, were among the productions associated with the fund’s financing efforts. This marked a significant shift from the informal, relationship-driven financing model of the Alaba era towards more structured institutional funding.
As Nollywood continued to mature, the pool of potential financiers expanded beyond government-backed institutions and traditional lenders. Private investors and investment firms began to approach film as a viable commercial asset, bringing more sophisticated financing models into the industry. Volition Capital Investments Limited, for example, has adopted a venture-capital-style approach to film investment, bringing together prominent technology and business investors to back projects such as The Black Book. Capital Film Productions has similarly pursued a structured investment approach, backing projects including Gangs of Lagos and developing ambitions to build a significant fund dedicated to African film projects. MBO Capital Management, a Securities and Exchange Commission-registered private equity fund manager, has also invested substantial sums across a portfolio of more than 17 Nigerian films and still counting .
But institutional financing changed the questions filmmakers had to answer.
A good story, a popular cast or a producer’s track record was no longer enough. Investors wanted to know: Who owns the film? What exactly am I investing in? What rights am I acquiring? How will it generate returns? Who controls the revenue? What happens if the film succeeds beyond expectations? What security protects my investment? Are there existing claims over the intellectual property?
This move from informal financing to institutional capital fundamentally changed the rules of the game. Filmmakers who were accustomed to raising money through personal networks, private relationships, and handshake deals were suddenly dealing with investors who demanded structure, documentation, accountability, and clear pathways to returns.
For many, this was a radical shift and one the industry was not fully prepared for.
In the next edition, we will unpack the documentation institutional investors require and examine how structured financing actually works within the Nollywood ecosystem.
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