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Creative industry must be creative about sourcing funders

OPINION

As South Africa battles to come back from junk status and the economy sinks into a technical recession, the country’s arts community wrestles with the issue of how to unlock funding for its creative endeavours, criminally under-financed in even the best of times.

Despite its limited resources, the creative economy contributed R90.5-billion to the South African economy in 2014, representing 2.9% of gross domestic product. Cultural and creative industries employ more than 440 000 people. It is a relatively well transformed sector, with more than 50% of enterprises owned by black South Africans, 40% by women and more than 30% by young entrepreneurs.

Key to accessing funding is encouraging private-sector partnerships with the arts. With this in mind, the department of arts and culture, supported by Business and Arts South Africa (Basa), and the department of sports and recreation, recently made representations to the Davis Tax Commission calling for the liberalising of tax law to make donations to the arts tax deductible.

At its recent second national conference, hosted by the arts and culture department’s research entity, the South African Cultural Observatory, Basa presented a panel discussion sketching scenarios for the creative industry in a junk status environment.

At the conference, I noted that the private sector is estimated to be sitting on a cash pile of R600-billion, which it has not invested in the country because of a lack of confidence in the future.

Arts enterprises, by nature creative, vibrant and dynamic, can boost confidence in the country’s future and thus be instrumental in encouraging private-sector investment for the benefit of its own initiatives and the nation at large.

I pointed out that the creative sector needs to be innovative in sourcing funding because state resources are likely to become increasingly constrained in a junk status environment, where servicing of debt would consume even more of the national budget. The sector needs to go where the money is.

This does not mean there is no government funding for the arts. Arts and Culture Minister Nathi Mthethwa has set out different funding models to support the arts. These include grant funding, a creative and cultural industries fund, debt finance and equity finance, supplemented by a catalyst fund, regional funds, accelerators and incubators.

I encouraged the arts to continue its lobbying of government to address the barrier to greater private-sector funding in Section 18A, which excludes arts donations from being tax deductible, and the Ninth Schedule in Section 30 of the Income Tax Act of 1962, which excludes arts, culture and heritage bodies from being public benefit organisations.

Michelle Constant, chief executive of Business and Arts South Africa, said arts entrepreneurs should investigate opportunities to sell equity in their businesses instead of being reliant on a grants or donations model.

“There are many innovative equity funding models that are worth investigating,” she said. “We need to look at ways of rethinking funding in our organisations.”

Constant said arts professionals understood the need to be business savvy and her organisation was involved in skills development in the arts sector. “Some creatives are already extremely entrepreneurial, and Business and Arts South Africa also runs education programmes, upskilling, developing access and agency for the arts sector, nationwide and across borders.”

I encouraged the creative sector to link with symbiotic industries such as tourism. Global tourism is expected to grow 3.3% annually from 2010 to 2030. Africa has a 5% share in worldwide arrivals and a 3% share in tourism receipts. South Africa is well positioned to grow this share.

To unlock government funding, enterprises need to locate themselves where the government is prioritising and it has budgeted R494-million for tourism promotion.

But R30-billion is going into agriculture and rural development and there is a R3.9-billion budget for small business development, as well as an average of R10.5-billion budgeted annually for arts, sports, recreation and culture.

I suggested that creative industries need to consolidate themselves in the first economy, moving from the underregulated and undertaxed second economy, to unlock markets, to better monetise their skills and to build greater appreciation of cultural and creative goods and services.

It takes a different approach to source funding in the first economy but it offers high dividends. In my view, millennials have a strong social consciousness. Those working in the first economy have access to money. Some may have trust funds, for instance, and they want to do good.

Seeking venture capital in the way the information and communication technology sector has is another path to funding. I believe that this can be done through pitching start-up ideas or building partnerships that are attractive to venture capital or “angel investors”. These could be in the environmental sector, as well as in the tech and digital field.

Given my experience as a South African ambassador, I also encouraged cultural and creative entrepreneurs to approach international missions, because they have a strong cultural focus.

The department of international relations and co-operation and its South African missions want to showcase the country’s talent to the world and to grow markets for our goods and services and the international community is open and curious about South Africa’s cultural output.

Another rich source is multilateral funding from the international community.

The United Nations Educational, Scientific and Cultural Organisation celebrates the world’s cultural heritage. The World Economic Forum has a trade and tourism council that offers synergies with the creative industry, as do the World Bank’s poverty alleviation and skills-development initiatives.

Constant said artists were becoming more financially literate.

“We are definitely seeing a shift from a survivalist to a sustainable approach,” she said. “But it is a long marathon and not a sprint.”

Abba Omar is the head of strategy and communications at the Banking Association South Africa

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