South Africa's film industry more than pays for itself , says new report


South Africa's film industry more than pays for itself with a 2.89 multiplier says the National Film and Video Foundation survey.

The first-ever national study of South Africa's film industry based on verifiable information has shown that in 2012 the industry contributed R3.5 billion to the national economy.

The research, commissioned by the National Film and Video Foundation (NFVF), and conducted by Deloitte, found that the industry 'more than pays for itself' with payments to the South African Revenue Services (SARS) of more than R670 million, a figure R420 million more than the estimated R250 million Film and Television Incentive paid by the Department of Trade and Industry in 2012.

The industry created a total of 25,000 full-time equivalent jobs in 2012, and, showed a multiplier of 2.89. That means that for every R1 spent in the film industry, an additional R1.89 is generated in the industries that service the industry and ancillary industries.

"The multiplier of 2.89 places the local film industry at ‘mid-range’ when compared to the economic contributions of 99 other industries within the country. The top five industries (drawn from financial services; public administration; electricity distribution; insurance and pension funds and coal and lignite mining) had GDP multipliers of between 3.71 and 3.52, whilst the bottom five industries multiplier effect were between a high of 1.42 and a low (engines and turbines) of 0.99," said Judy Prins Leader of Deloitte Sport, Media & Entertainment at Deloitte.

"For the first time we are able to articulate what returns there are for government's investment in the film sector. The data collected with this research will allow us to focus our strategies on the efforts most likely to bear fruit for the South African economy.

"Not only do we now have data to make informed investment decisions but we are also encouraged that the efforts put into the sector are now paying off," said Zama Mkosi, NFVF CEO.

Also of significance, the film industry has grown 14% per annum over the past 5 years. "We know the film sector plays a vital role in social cohesion. Now we also know that with ongoing and additional support - from government and private investors - the film sector can continue to contribute to government's goals of job creation and poverty alleviation," said Mkosi.

Discussing the results of the NFVF research, Prins said that as there was no central database of information regarding the South African film industry, a multi-pronged approach was required to collect data to obtain an accurate picture of the industry. This involved the Department of Trade and Industry, which administers the South African Film and Television Incentive available for film-makers in the country; a national online survey; and, meetings with key stakeholders.

A value chain analysis was also done as part of the study of the South African film industry, which revealed key trends and issues within the industry. Referring to this, Mkosi said that "despite the significant investment government has made into the film industry through the DTI incentive, producers and film-makers still face challenges in securing equitable partnerships with foreign film producers. The South African film incentives rank amongst the least competitive film incentives in the world to encourage foreign film-makers to film in South Africa, coming 24th in the rankings behind countries like New Zealand, Mexico and Germany.

Despite the fact that the local industry grew, it had to deal with significant challenges such as small cinema-going audiences; high exhibitor costs; short flighting windows available for their films; decreasing DVD revenues thanks largely to a thriving pirate trade (and to a lesser degree to the effects of online downloading, streaming and video-on-demand); a lack of funding available for development and production costs; a lack of distribution incentives; and, little international presence."

"Despite major challenges in the value chain, the industry has shown the commitment and ability to adapt, survive and grow. The industry has grown 84% in the past five years and there is no doubt that it will continue to be an active industry in the future," concludes Prins.

To view or download a complete document of the economic baseline study, click here