Sifiso Skenjana: How SA can maximise the creative industries as growth sectors | Fin24
 
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Sifiso Skenjana: How SA can maximise the creative industries as growth sectors

Aug 02 2019 06:00
Sifiso Skenjana

The recent passing of 77-year-old veteran actor Nomhle Nkonyeni saw prominent actor Zikhona Sodlaka take to the stage during her memorial service at the Joburg Market Theatre.

Sodlaka raised the role government seemingly failed to play in ensuring gender and race transformation in the creative arts economy. uMama Nomhle had also recently been the recipient of the Order of Ikhamanga – an award granted by the president, in honour of her excellence in the fields of arts and culture.

Much of actor Sodlaka’s outcry points to similar critiques both inside and outside the industry, lending to how the pending Copyright Amendment Bill would worsen prospects of investment and transformation in the creative arts industries.

Foreign and local investment in the creative arts industry (like many industries) will be driven by both fair and equitable incentive structures as well as a conducive legal infrastructure to support the growth of the industry. I have in previous essays lamented that the legal framework proposed in the Copyright Amendment Bill, however, is particularly regressive in its articulation.

While the spirit of the Bill is pro socio-economic development and sustainability, in its current form, it will likely fall short of meeting its economic, transformation and inclusivity imperatives.

The earliest incentive programme in the industry was reported in 1956, where tax rebates were provided to encourage local production (then mainly for white audiences). The Department of Trade and Industry (DTI) had a few incentive programmes in place which were designed to attract investment into the industry.

Two such programmes were the South African Emerging Black Filmmakers Incentive and the SA Film and TV Production Incentive. The former offered a reimbursable grant of up to 50% of the Qualifying South African Production Expenditure (QSAPE) guidelines up to a maximum of R50m per qualifying project. The latter included a foreign investment incentive component, which would provide up to 30% of QSAPE amongst other conditional details in the incentive structures.

Under the incentive programmes, the DTI reports that 99 productions were approved during the 2017/18 financial year with a projected investment of almost R2.9bn. Many large foreign film and television corporations, FDIs and NGOs have pleaded with the DTI to make their incentive structures more accommodative for large scale film investment into the industry. And a result, some of the largest film production corporations still do not have South Africa on their investment radar.

And while we have seen some growth in the industry in terms of new participants, why are we not seeing a sizeable growth and transformation?

Recognising the employment value

According to the National Film and Video Foundation, 222 films were released in 2017, of which a meagre 23 originated locally, and they contributed R12.2 billion directly and indirectly to the GDP of the country.

The South African Cultural Observatory estimated that in 2015 the cultural and creative industries employed roughly 6.72% of South Africa’s labour force, while Stats SA had reported the number closer to 2.83% in 2014.

The sector is reported to have an employment multiplier of 4.9, which means that for every R1 m invested in the industry, approximately five new jobs are created. This multiplier is behind to only Agriculture and Community, Social and Personal Services sectors when compared to the 2015 TIPS Estimation of Employment Multipliers.

Attracting FDI

Foreign investment in the creative industries is paramount if the industry is to grow and compete globally. As mentioned earlier, the film industry is dominated by foreign film with the local film only demanding a market share of between 7% and 10%.

Many of the local productions do not make enough to be able to recoup as much as 50% of their production costs. This, of course, suggests that the legislative infrastructure should ensure that for all the foreign direct investment we attract into the creative industries, we ought to ensure the right technological and skills transfer takes place to ensure the domestic market becomes more competitive.

In addition, National Treasury has a Section 12J Venture Capital Company incentive in the Income Tax Act which came into effect in 2009, providing an incentive for companies to invest in the local businesses and the local economy and qualify for up to 100% tax deduction.

Global context on investing in the creative industries

Globally, there are cities that are bustling with economic activity on the back of real and effectual investment in the creative industries.

Cities like Amsterdam, Brisbane, Berlin, Barcelona, Dublin, Helsinki, Manchester, Milan, Montreal, Tilburg and Toronto have stamped themselves as global creative industry hubs and our policy makers ought to tear a sleeve from those books in their endeavours to spur the domestic creative industries.

The creative industries have increasingly been recognised as growth sectors and we cannot afford to ignore how both the legislative infrastructure as well as the lack of transformation in the industry are holding the country back from realising real economic growth from the sector.

sifiso skenjana  |  film  |  economy  |  entertainment  |  growth
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