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Home/Art/The $6.3 billion Impact of African Art

The $6.3 billion Impact of African Art

Posted by : admin / Posted on : October 22, 2019

Ben Enwonwu’s iconic painting, Tutu, became the most highly valued work of Nigerian modern art ever sold at an auction for £1.2 million ($1.67 million).

via GIPHY

These figures are whooping, but pick your jaw off the ground for a minute, that is not even the best part!

 

There is a high demand for African art across the globe and the international market for African art is indeed growing. With this unprecedented growth, several questions arise; how do we transform the market for art from Nigeria and embark on new directions in art lending, investment and wealth management? How do we develop appropriate regulatory and legal frameworks?

The Ben Enwonwu’s Foundation in collaboration with the Society of Nigerian Artists and supported by Alliance Française /Mike Adenuga Centre Lagos held its second edition the monthly series ‘Point of View: Raising Capital Against High-Value Works of Art” to awaken and stir up conversations in that regard. Read about it here

During the discussion, the Challenges, Risk, Regulatory and Legal Framework  inspired this article which discusses amazing benefits for artists, art collectors or auctioneer

Let’s get right to it!

 

 

 

 

Art as an Investment 

 

It will interest you to note that Art is a great alternative investment opportunity, just like real estate, artworks are timeless and appreciate in value.  One of the panellists, London-educated art collector Kavita Chellaram spoke on the importance of art collection as a great investment in Nigeria. Yemisi Shyllon is arguably the biggest private collector in Nigeria. It is a known fact that he has acquired over 6,000 artworks which he started collecting as an undergraduate of engineering and law, at the University of Ibadan and Law respectively

 

There are multiples ways to invest in Art, which can either be by acquiring or purchasing shares in a company in exchange for your art collections. Section 137 -139 of the Companies and Allied Matters Act makes it possible to issue shares by other considerations other than cash.

 

Other options include raising money in an art fund, buying private equity with art, etc.

 

 

 

 

Art as a Collateral 

 

According to the World Property Organization, there is a growing awareness that intellectual property assets can be monetized. There are various ways to do so. IP can be sold, licensed, used as a collateral or security for debt finance.

 

Art is very useful in acquiring capital and it may be considered as part of your overall wealth management strategy by commercial banks. Acquiring loan facilities using art as a collateral can be used to finance new art acquisitions, fund investments, manage short-term cash needs, and achieve longer-term asset allocation and estate planning goals.

 

In 2017, the vice president, Yemi Osinbanjo signed the bill of Secured Transactions in Movable Assets (Collateral Registry Act ) into law. The Act applies to all security interests in movable assets created by an agreement and all financing and operating leases entered after the commencement of the Act. Movable assets includes all tangible or intangible property other than real property.

 

It is great to know that intangible property is now considered when obtaining a loan facility in Nigeria.

 

 

 

 

Resale of Art Collections 

 

The art market has evolved from a non-commercial venture to become a proper trading business. However, Mr Yemisi Shyllon stated that the art market is unregulated and thus vulnerable to fakes and forged art pieces. It’s imperative to determine the authenticity of your art collections when considering the strategy for the sale or exhibition of an art collection. If you are on the other side of the table, you must first protect yourself by signing an indemnity clause agreement with the seller. This clause transfers legal liability to the party who sold the art pieces to you.

 

 

 

 

Art Merchandising 

 

The Copyright Act provides multiple rights which a copyright holder enjoys over his creations. One of such many rights is the reproduction of your work in any other medium or form. An artist can transfer the image of his artworks onto a shirt and sell the shirt as a great way to promote his art. This is very common in the art industry, for example, Mary Engelbrein reproduced her artworks in cards, calendars and other formats. Another great way of merchandising your art would be to license the image of your art to different companies at the same time.

 

There is an endless list of, new and exciting business opportunities which have emerged over the years in the art industry and its refreshing to know that these business opportunities offer new revenue streams in an industry that’s traditionally been considered as “unconventional”.

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Odiete Onajite is a Lagos based lawyer with peculiar interests in the business of Arts , Fashion and Entertainment law. She is the executive editor of legallyplugged, a legal blog providing news, insights and opinions dedicated to the creative industry. The blog aim is to serve as a community for lawyers and stakeholders in the creative industry.  You can reach Onajite via the following: odietefunke@gmail.com.  Twitter & IG: @funkeodiete.

Tags: Art, lagos, Nigeria

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