The Nigerian music industry is no doubt one of the world’s booming music industries.
As Afrobeats continues to dominate the world with global records like Calm Down by Rema, Essence by Wizkid, and Love Nwantiti by CKay amongst others, world music executives continue to look towards Africa.
Despite the heavy presence of the majors along with independent music distribution companies, music distributors like AWAL, UnitedMasters, and others still couldn’t resist coming down to Africa in search of some of the Afrobeats honey.
Regardless of how booming the Nigerian music industry looks, it is not immune to the economic forces that shape the country's financial landscape. One such force is the fluctuation of exchange rates, particularly between the US dollar and the Nigerian naira. In this post, we'll explore how these exchange rate movements can affect various aspects of the Nigerian music industry.
As of 12:47 pm WAT on February 21, 2024, the dollar to naira exchange rate is at N1830 on the black market according to Aboki Forex. The parallel section of the foreign exchange market recorded a new all-time low on Tuesday after the naira depreciated to N1,830 per dollar.
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1. Cost of Equipment
Most of Nigeria’s musical equipment is imported. From guitars to pianos, down to laptops, music production software, speakers, and more. A significant portion of Nigerian musicians and producers rely on imported equipment for recording and production purposes. A weak naira means a high cost of production. As producers, sound engineers will review their prices if they ever want to purchase more advanced equipment.
2. More naira for Nigerian artists via advances or royalties
Artists like Burna Boy, Rema, and Wizkid, among others, are going to be smiling right now. These artists get advances for projects in dollars, the same as their streaming and publishing royalties. With the surge of digital streaming platforms, Nigerian artists earn revenue from streams worldwide. A weak naira means more naira to these guys when they convert their earnings to naira.
3. High purchasing power for marketing campaigns in Nigeria
Even though most media companies, influencers, and agencies will review their prices to align with the new exchange rates, Nigerian artists and their labels are still going to find it cheaper to oversee marketing campaigns in Nigeria as compared to the cost of doing so in 2023, when the naira was not as weak as it is today. But this might not favour indie and rising artists, as most of them earn in Nigeria and not dollars.
4. Touring Costs
Many Nigerian musicians aspire to tour internationally, but a weaker naira translates to higher expenses for booking venues, transportation, and accommodation abroad. Such elevated costs may hinder Nigerian artists' ability to tour globally or force them to hike ticket prices to offset the increased expenses.
5. Purchasing Power of Fans
If exchange rate fluctuations lead to inflation or economic instability in Nigeria, the purchasing power of fans may dwindle. This could result in reduced spending on music-related activities such as concert tickets, merchandise, and music downloads, thereby impacting the revenue streams of Nigerian artists.
6. Effect on International marketing campaigns
The Afrobeats to the world wovement may not be possible again if the dollar continues to step on the naira, especially for independent artists who do not have dollars to spend. Foreign media charge in dollars or pounds which is something an average Nigerian artist does not have to spend at the current exchange rate.
In conclusion, the adverse impact of the prevailing dollar-to-naira exchange rate outweighs any potential positive outcomes. The disparity between the two currencies has created significant challenges for the Nigerian music industry.
