EVALUATING THE USE OF INTELLECTUAL PROPERTY RIGHTS AS COLLATERAL FOR FUNDING THE CREATIVE ECONOMY IN NIGERIA.
By Ajibola Bello and Veronica Ayeni
On the 27th of June, 2025, the Africa Export-Import Bank (the Bank) held its Annual General Meeting (AGM) in Abuja, bringing together shareholders, stakeholders, policymakers, and creative industry leaders from across the world, particularly Africa. As a side event to the said AGM, the Bank organised a symposium themed “Content is the New Crude”. The symposium featured a panel session that discussed critical issues affecting Nigeria’s burgeoning creative economy, including the financing of creative projects, intellectual property protection, and revenue distribution, amongst other things.
Most significantly, while setting the tone for the symposium, the Honourable Minister for Arts, Culture, and the Creative Economy, in delivering the keynote address, stated that the Federal Government was actively exploring frameworks to deploy intellectual property rights as acceptable collateral for loans and funding opportunities within the creative industry. According to the Minister, the intention is to unlock financing that will enable Nigerian creatives to further expand their art, music, film, and other content creation activities, thereby stimulating economic growth, job creation, encourage innovation, and stimulate broader participation of Nigerian creatives in a global knowledge-driven economy.
As viable as the topic of discussion was, certain germane questions were unanswered and the questions form issues that are worthy of deeper consideration. For instance, how would a talented kid, who is somewhere in Ajegunle, and who has noexisting registered work, partake in the prospect, how will the intellectual property right be useful to the venture capitalist in recouping the facility, what legal framework are necessary to prevent exploitation and backlash for emerging talents. Answers to these questions are important particularly as they affect the feasibility and practical implementation of using intellectual property rights as collateral in Nigeria.
Intellectual property generally refers to creations of the mind, ideas transformed into tangible or intangible assets such as literary works, musical compositions, audiovisual productions, artistic works, software, and even certain designs or trademarks. In Nigeria, these rights are recognised and protected under various laws, including the Copyright Act, the Patents and Designs Act, and the Trademarks Act.
For the purposes of financing the creative sector, particular emphasis lies on copyright-protected works stemming from the creation of audiovisual content, music, and related works, which now form a dominant stream of revenue through streaming services, live performances, licensing, and other forms of distribution.
When a creator develops an original piece of work, say a song, an artwork, or a film, and registers it with the relevant regulatory agency, they secure exclusive rights over its exploitation. This means that any use of the work, either now or in the future, attracts revenue for the creator in the form of royalties or licensing fees. For example, if an artist releases a song and it is played on the radio or streamed online, every instance of its usage potentially generates income, subject to the right management system in place. Such a registered and monetised intellectual property right becomes a revenue-generating asset. In that regard, it is bankable and may qualify as collateral in financial transactions.
Essentially, intellectual property rights, once protected, commercialised, and earning consistent revenue, can form a predictable cash flow. Therefore, they are capable of serving as security against loans, much like physical assets or traditional collateral would do.
However, challenges emerge when considering the practical realities of using intellectual property as collateral, especially in a creative economy like Nigeria’s. Established artists with a recognised body of work, such as an album that has gone platinum or a film that has achieved strong box office performance, would be in a favourable position. Investors, banks, or funding institutions (such as the Bank of Industry, Afrexim Bank, and similar organisations) would more readily accept such rights as collateral, because the value of those rights is already tested in the market and can be appraised with reasonable certainty.
“There is a broad framework that allows for the use of non-traditional movable assets as collateral, including intangible assets.”
In contrast, the challenge is far more complicated for emerging or unknown talents. An upcoming artist who has raw, promising talent but no completed, recorded, or commercially tested works will struggle to convince investors or banks to treat their intellectual property rights as bankable. Take, for instance, the scenario of Wizkid before his debut album with EME. While his raw talent was evident to managers and producers, there was no body of work at that stage capable of being valued for loan security. Only after recording and releasing an album with proven commercial viability could his intellectual property rights be recognised as collateralizable, based on a valuation of present earnings and future revenue projections that would satisfy loan repayment requirements.
This scenario raises important questions: How do investors and lenders assess the value of an intellectual property right that is yet to generate income? How can raw but unproven creative potential be de-risked for funding? These questions must be answered through frameworks that combine valuation expertise, robust copyright registration, market data, and perhaps guarantees by third-party institutions to incentivise lending.
From a financing perspective, the adoption of intellectual property as collateral is not entirely novel. Under Nigerian secured transactions law — notably, the Secured Transactions in Movable Assets Act, 2017 (STMA) — there is a broad framework that allows for the use of non-traditional movable assets as collateral, including intangible assets. The Act recognises intangible property as eligible for security interests, and it further mandates registration of such security with the National Collateral Registry to perfect and prioritise creditor rights.
Accordingly, intellectual property rights may fall within the category of intangible collateral under the STMA, provided their ownership is demonstrable, their valuation is ascertainable, and their revenue streams are reasonably predictable. However, translating this legal recognition into functional, bankable instruments faces a number of practical and regulatory hurdles:
Valuation Challenges:
There is currently no harmonised valuation standard in Nigeria for intellectual property rights. Determining the fair market value of a song, an audiovisual work, or even a design involves complex assessments of projected royalties, past earnings, market reception, and enforcement risk. This requires specialised expertise and valuation protocols, which remain underdeveloped.
Ownership Verification:
Intellectual property is often fragmented among multiple parties such as composers, performers, producers, and even distributors. Establishing a clear title or chain of title is a fundamental legal requirement for its use as collateral. This means due diligence processes must be strengthened, and creators must maintain proper documentation of their ownership and licensing arrangements.
Enforceability:
Creditors must have a reliable mechanism to enforce their security interest in the event of default. While the STMA and the Companies and Allied Matters Act (CAMA 2020) provide the broad framework for the enforcement of security, the intangible nature of IP rights presents additional complexity. For example, a creditor may find it difficult to monetise a seized song catalogue or film rights without industry expertise.
Registration and Perfection:
To be legally perfected, a security interest over intellectual property must be registered at the National Collateral Registry, and arguably, for more legal certainty, also noted with the relevant IP registry (such as the NCC or the Trademarks Registry). This double-registration system may need to be streamlined by regulation or practice direction to avoid uncertainty.
Cross-border Considerations:
Many Nigerian creatives distribute their works globally. If an intellectual property right is monetised beyond Nigeria’s borders, issues of conflict of laws, foreign recognition of Nigerian security interests, and treaty obligations under the Berne Convention and trade-related Aspects of Intellectual Property Rights may arise. Any legal framework to adopt IP as collateral must consider these cross-border dimensions to avoid enforcement paralysis.
In summary, the use of intellectual property rights as collateral for funding Nigeria’s creative economy holds enormous potential to revolutionise funding within Nigeria’s creative economy. If properly structured, it could deepen access to finance, foster innovation, incentivise new entrants, elevate the status of Nigeria’s creative sector as a true economic growth driver and scale the contributions of the creative sector to national GDP.
However, to transform this promise into practice, significant legal, regulatory, and policy refinements are indispensable; policy, legal, and practical frameworks must be carefully developed to address valuation challenges and investor confidence, especially for emerging creators whose works are yet to attain commercial validation.
That said, credit must be accorded to the Cream Platform which is playing a major role in affording funding opportunities for unpopular artists and creatives. The Platform offers diverse opportunities including streaming, record deals, funding etc, which can be a springboard for acquiring viable intellectual property rights that can later become bankable.
Intellectual property rights as collateral are not merely an abstract entitlement; they are valuable assets deserving of a robust, credible framework to unlock their true economic potential and we can only hope that the regulation is efficient in order to harness its benefit.
Ajibola Bello is a Legal Practitioner, Head of Corporate and Comemrcial Department, and Deputy Managing Partner at
Law Corridor, Abuja. | ajibola@lawcorridor.com
Veronica Ayeni is a Legal Practitioner and Associate in the Intellectual Property, Tech, Media, Entertainment & Sports Law Team of Law Corridor, Abuja. | Veronica@lawcorridor.org