Formal Deliberations on South African Post Office Bill [B2-2010]

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Communications

13 June 2011
Chairperson: Mr S Kholwane (ANC)
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Meeting Summary

Formal deliberations on the South African Post Office Bill would commence on 15 June 2011.

The advertising industry had previously been criticised for the slow rate of transformation.  The Committee was briefed by the Media Development and Diversity Agency, the Association of Communication and Advertising and the Advertising Standards Authority of South Africa on the progress made in transforming the industry since 2002.

The briefing by the Media Development and Diversity Agency included an overview of the background, legislative framework, vision, mission and mandate and the objectives and approach followed by the organisation in carrying out its mandate.  The presentation focused on the issue of transformation in the advertising industry and reported on the research conducted by the Agency on the community media sector.  Although the sector had an audience market share of 25% of radio listeners, community radio only attracted 6.5% of the total amount spent on advertising in the country.  Reliable data on community print media was not available but the Agency had found that the industry had little understanding of the community media sector.  The advertising industry had implemented two transformation charters and the Media, Advertising and Communication Transformation Charter was gazetted in August 2008.  The Agency concluded that progress had been made but that the desired level of transformation had not yet been achieved.

Members complained that the presentation documents from the Agency were not received in time to allow for adequate preparation.  Members reported complaints received by the Committee during recent oversight visits to the Eastern Cape and KwaZulu Natal.  Other questions asked by Members concerned the attitude of advertising companies, the marketing of community media and the standard of the product offered, the promotion of indigenous languages, ownership by black women and the lack of understanding of the community media sector.

The Chairperson of the Board of the Association for Communication and Advertising presented a verbal briefing to the Committee.  The advertising industry was dominated by ten major international companies with little concern for small, community-owned media enterprises.  The briefing commented on the application of Government advertising spending, the role played by the public broadcaster and the prevalence of advertising messages.  The Media, Advertising and Communication Transformation Charter was gazetted as a Section 12 charter.  The process to change to a Section 9 charter had stalled when the responsible official had left the Department of Trade and Industry.  The Association advocated additional support for small black-owned enterprises and cited examples where such companies were unable to gain the necessary expertise to successfully deliver on Government tenders within the three-year contract period.  The role played by the recently established MACSETA would be significant.

Members requested that future briefings were supported by documentation.  Members asked questions to obtain clarity on the issues where the assistance of the Committee was requested and agreed that broader engagement with the sector was required.

The mandate of the Advertising Standards Authority of South Africa was limited to adjudicating complaints by consumers concerning advertisements.  The Authority listed a lack of human and financial resources as major challenges and requested the assistance of the Committee in gaining access to Government funding, which was promised by the previous Minister of Trade and Industry.  Another challenge was the refusal of Government entities to accept the ruling of the Authority when the ruling was against the entity concerned.

The Chairperson reported an incident where he was dealt with in a rude manner by an ASASA employee.  Questions were asked about the action taken to address the challenges faced by the Authority and if any criminal behaviour by advertisers was detected from the complaints lodged by consumers.

Meeting report

Formal deliberations on the South African Post Office Bill [B2-2010]
The Chairperson requested that the Members of the Committee checked that all matters had been dealt with in preparation for the formal deliberations on the Bill, which would commence on 15 June 2011.  Copies of the published Bill and the schedule of amendments had been distributed to the Members.

Briefings on the transformation of the advertising industry
The Chairperson said that the advertising industry had been criticised for the slow rate of transformation.  Various industry entities had appeared before the Committee on two previous occasions and a charter on the transformation of the industry had been agreed.  The Committee was concerned over the continued slow rate of transformation in the advertising industry and had requested the briefings in order to track what progress had been made.

Ms S Tsebe (ANC) advised that she had not received copies of the presentation documents.

The Committee Secretary replied that copies of the presentation documents from the Advertising Standards Authority of South Africa (ASASA) were distributed during the previous week but the documents from the Media Development and Diversity Agency (MDDA) were only received on the day of the briefing.

Ms R Moratoa (ANC) expressed displeasure over the late submission of the presentation documents from the MDDA as Members of the Committee had insufficient time to study the documents and to prepare for the briefing.

Mr Lumko Mtimde, Chief Executive Officer, MDDA apologised for the late submission of the documents.  He explained that the Agency had received the invitation to brief the Committee on 8 June 2011 and had little time to prepare and obtain the approval of the principals of the organisation before the briefing.

The Chairperson conceded that the invitation to the MDDA was issued late but explained that Members required copies of the documents at least seven days prior to the briefing in order to prepare an approach.

Briefing by the Media Development and Diversity Agency (MDDA)
Ms Nadia Bulbulia, Member of the MDDA Board introduced the delegates from the Agency to the Committee.  She gave an overview of the background, context and legislative framework; the objectives of the Agency; the vision, mission and mandate and the approach followed by the MDDA in implementing its mandate (see attached document).

Mr Mtimde presented the introduction to the issue of the transformation of the advertising industry.  The introduction included an historical perspective, the adoption of the Values Statement of the Marketing and Communication Industry on 23 April 2003 and the research conducted by the MDDA.  The MDDA had facilitated oversight visits by the Committee in the Eastern Cape and KwaZulu Natal provinces during March 2011.  Stakeholder meetings held during the oversight visits had highlighted that challenges remained in the industry. 

The major challenges were identified as the lack of advertising support for community radio and television stations, small commercial media and community print media projects; a lack of understanding by the advertising industry of the community media sector and the misconception that the lower income groups serviced by the community media sector had too little disposable income.

The briefing included data on community radio and television audience numbers and the amount of advertising revenue attracted by these categories of communication media. Total private sector advertising spending in 2010 amounted to R2.3 billion. The 120 community radio stations had a 25% audience market share but only attracted 6.5% (i.e. R18 million) of total advertising spend.  Research into community print media advertising was inaccurate as the list of publications included commercially-owned publications that were excluded from the MDDA Act definition.

The challenges faced by the community media sector were summarised. The MDDA was currently in discussion with the Department Government Communications and Information Systems (GCIS) to gain equitable access to Government advertising spending for the community media sector.  The Agency was facilitating seminars to improve the understanding of the sector by the advertising industry.  Research conducted by the MDDA indicated that the industry was dominated by a few multi-national media companies.  The Agency was actively involved in promoting the small, black-owned and community media enterprises.

Despite a lack of benchmarking criteria, the advertising industry had implemented two transformation charters in addition to the Marketing, Advertising and Communication Transformation Charter that was gazetted on 29 August 2008 under Section 12 of the BBBEE Act.

Ms Bulbulia concluded the briefing with a summary of the MDDA recommendations with regard to the transformation of the industry.

Discussion
Mr C Kekana (ANC) had noted during the recent oversight visits that community media projects were hampered by old and broken equipment.  The projects complained about the lengthy process that had to be followed to requisition spares and repairs from the MDDA headquarters in Pretoria.  The Agency was accused of being top-heavy and projects were required to liaise with a senior person, who was often unavailable.  The system was considered to be too dictatorial and authoritarian and he asked if the MDDA would consider easing the processes and procedures that had to be followed.

Mr K Zondi (IFP) found that the MDDA had painted a discouraging picture of the progress made in transforming the industry.  He noted that the centralisation of Government spending on advertising was commended by the MDDA.  He wanted to know what the position of the large media companies was as the influence of these organisations on the industry was significant.  He asked if the large media companies were willing to increase the amount of advertising spend to the community media sector.

Mr N Van den Berg (DA) pointed out that the advertising industry was extremely competitive and the basic purpose of advertising had to be taken into account.  The industry was under financial pressure and it must be understood that the money spent on advertising was not intended for charitable purposes.  He asked how effectively the community media sector was marketing itself and what the quality was of the product offered.  It was idealistic to place the blame only on the advertising industry.

Ms Moratoa asked what the vision of the MDDA was with regard to promoting the indigenous languages of the country.  She asked what action was taken to increase ownership by black women and what yard-stick was used to measure ownership by black women.

Mr Mtimde replied that the MDDA considered the language issue to be of fundamental importance.  He acknowledged that the promotion of languages other than English in the print media remained a challenge but more progress had been made in radio and television broadcasting.  The MDDA prioritised ownership of media entities by previously disadvantaged communities and had developed programmes to achieve this particular objective.  Targets were set to increase the number of black women benefiting from ownership, particularly in the rural and per-urban areas.

Mr Mtimde denied that the MDDA was ‘pointing fingers’ at the advertising industry and had merely stated its case.  The departure point was an understanding of the advertising industry.  The fact that commercial radio stations had an audience market share of 25% but only attracted 6.5% of advertising spend illustrated the lack of understanding of the sector by the mainstream industry.  A further misconception was that community media organisations were not professionally managed.  The MDDA provided support to community media organisations to market themselves as well as engaging with the industry to increase awareness and knowledge of the sector.  It was necessary to distinguish between community-owned and privately-owned community print publications.  Community media enterprises were defined in the MDDA Act but other publications aimed at smaller communities were owned by companies such as Caxton and were excluded from the definition.

Mr Mtimde advised that the advertising industry was not resistant to transformation and the MDDA had developed good relationships with the major media companies.  The challenges had been identified and the parties were actively engaged in finding solutions.  The current situation was not ideal and the process of transformation of the industry must be regarded as a work-in-progress.  The MDDA conducted monitoring and evaluation of the progress made and was engaged in establishing a benchmark.

The Chairperson remarked that there appeared to a lack of common understanding of the community media sector.

Mr Mtimde agreed that the issue required ongoing engagement.  Understanding of the sector was an academic matter.  The nature of the community media sector was complex.  With regard to the complaints reported by Mr Kekana, he explained that the MDDA discouraged projects from becoming dependant on the Agency for ongoing support.  The MDDA provided initial support and training but the complaints referred to should be directed at the Department of Communication.

Dr Tanja Bosch, Member of the MDDA Board said that the community media sector should not be compared with the commercial media sector with regard to the product offered.  The Community media sector showed an increase in audience numbers, which reflected the growing popularity of this type of media with consumers.  It was essential that the perceptions of the clients of advertising companies were corrected.

Ms Bulbulia agreed that the promotion of indigenous languages was a core issue.  Community media played an important role and the MDDA was investigating the extent of coverage in the indigenous languages that was provided as well as the effectiveness of the language that was used.  The MDDA advocated the use of basic, simple language that was easily understood.  She agreed that the establishment of a better funding model for community media remained a challenge as the advertising spend in the country was limited.

Ms Moratoa asked if the MDDA had engaged with the Commission on Gender Equality (CGE) on the issue of black women ownership in the advertising industry.

Mr Kekana remarked that the utilisation of resources by the private sector was generally governed by hard-nosed business principles.  He was of the opinion that such attitudes spelled disaster for the achievement of transformation and advocated the intervention of Government to protect the poor against exploitation.

The Chairperson observed that the briefing made no mention of the needs of the disabled community.

Mr Mtimde replied that Government was the largest contributor to advertising spending in the country, hence the engagement with GCIS.  Government entities were concerned over how the money was spent and needed to ensure that the message was effectively communicated.  It was Government policy to support the black-owned media sector.  The MDDA was committed to change the previous sexist and racist approach of the advertising industry and the Agency worked closely with the GCE in this regard.  The MDDA was committed to ensuring that the disabled community benefited from projects and had engaged with various entities to identify how the community could be better served, for example the placement of advertisements in Braille and increased inclusion in the information society.

The Chairperson thanked the MDDA for the briefing.  He was pleased to note the improved involvement of GCIS in promoting transformation of the advertising industry.

Briefing by the Association for Communication and Advertising (ACA)
Mr Nkwenkwe Nkomo, Chairperson of the ACA and the MACSA Boards, presented a verbal briefing to the Committee.  He explained that the global advertising industry was dominated by ten major companies, nine of which operated in the developed Western countries.  Within this context, what happened in small, rural South African communities was not considered to be important.  To regard the industry to be merely profit-driven was too simplistic a view.  The role of the South African Broadcasting Corporation (SABC) in the South African advertising industry must be considered as well.  Community media played a similar role to that of village elders passing on the stories and history of the community.

Mr Nkomo said that the money spent by Government on advertising had to fulfill a specific purpose.  It was necessary to achieve a balance between achieving the objectives and supporting the community media sector.  People were exposed to advertising messages in various formats everywhere.  In South Africa, the industry employed 10,000 people butt impacted on the lives of 45 million on a daily basis.

The Media, Advertising and Communication (MAC) Sector Charter on Black Economic Empowerment was gazetted on 29 August 2008 (see Government Gazette No. 31371).  The Gazette included a proposed MAC transformation charter, a proposed MAC industry scorecard and the constitution of MAC SA.  MAC SA was constituted in accordance with Section 12 of the BBBEE Act but the entity had been engaged with the Department of Trade and Industry (DTI) to change to a Section 9 organisation. However, the process had stalled after the responsible DTI official resigned.  MAC SA required the assistance of the Committee in getting the process started again.

MAC SA was committed to growing the industry but Government interventions needed to be reviewed.  He cited the example of two black-owned companies that were awarded substantial Government tenders but had failed to deliver the required service within the three year term of the contract.  A period of three years was not sufficient time for these newly-established companies to gain the required experience and expertise.  Government had indicated that the contracts would be awarded to other companies on expiry of the three year term.  MAC SA felt that the non-renewal of the contracts was unfair.  The second company went out of business because Government had not paid for the filming of a Government advertisement.  MAC SA had approached the National Treasury but had not received a response.

Mr Nkomo suggested that a review mechanism was put in place and that provision was made for Government intervention when necessary.  The various advertising sectors needed to become more involved in the development of the black-owned enterprises.  The MAC Sector Education and Training Authority (MACSETA) had replaced the MAPPSETA.  He warned that if the MACSETA was hostile to the major media companies, the small companies would suffer.

Discussion
Ms Tsebe said that the Committee would like to assist but needed to know exactly what assistance was required.  She asked for clarity on the issues concerning the role of the SABC and black ownership.  The Committee agreed that the major focus should be on the growth of the community media sector but wanted to know how this objective could be achieved.  She asked for an explanation of the statement in the transformation charter concerning the establishment of the advertising industry in South Africa “for all the people of South Africa; by all the people of South Africa”.

Ms N Magazi (ANC) asked for more information on the problems experienced with registering MAC SA as a Section 9 entity.  She said that the transformation targets that were set would not be achieved unless the playing fields were leveled.  The Committee became aware of the difficulties experienced by the ACA only when the organisation was invited to present a briefing and she feared that the status quo would have remained.  She suggested that the Committee suggested the issues in a study group and that the DTI was invited to provide input.  The transformation of the advertising industry was high on the Government agenda.  She was aware of many small companies that experienced difficulty in delivering on big Government tenders.  These companies should be provided with mentoring and coaching assistance and their progress should be monitored.

Mr Kekana had found the briefing stimulating but it was not made clear which issues needed to be addressed.  He wondered if television broadcasting had changed from the previous slant towards the American value-system.  The intention of the Committee’s oversight activities was to effect change but more action was required.  The problems experienced by the two companies in delivering on their tenders should have been reported to the Committee.  He was of the opinion that a formula to establish and sustain businesses was necessary.  Tenders should be awarded on a fairer basis that would provide aspiring entrepreneurs with a better chance to be successful.

Mr Van den Berg was not sure of the distinction between the ACA and the Advertising Standards Authority of South Africa (ASASA).  He questioned whether the ACA and ASASA were exceeding their mandate and were getting involved in matters that fell under the mandate of the MDDA.

Ms Moratoa also queried the differences between the mandates of the ACA and the MDDA.  She asked what action was taken by the ACA to implement the transformation charter.  She requested the guidance of the Chairperson as no documents were provided to support the ACA presentation.  The Committee required a briefing on the strategic plan and budget of the ACA as well.

The Chairperson asked what matters needed to be dealt with in order to finalise the Section 9 charter.  He asked if the charter would address all the issues and how it would impact on the issues raised by the MDDA.  He asked for more clarity on the South African and global ownership of advertising companies.  The Committee cannot comment on the example of one or two companies that had experienced difficulties and required more information.

Mr Nkomo replied that ACA considered itself as the creator and custodian of a truly South African advertising industry.  Advertisements created in other countries and shown in South Africa were not desirable.  The timeline developed for the 2016 growth path should indicate where the country was in terms of black-owned enterprises.  The Section 9 charter was exhaustive and addressed all the issues.  The process had stalled when the responsible official had left the employ of the DTI and all that was necessary to re-start the process was to fill the vacancy.

Mr Nkomo explained the difference between the ACA and ASASA.  He reiterated the difficulties experienced by young, black-owned companies in developing the necessary expertise to deliver on Government tenders.  He felt that such enterprises needed to be provided with ample opportunity to develop the necessary skills.  ACA was considering establishing a task team to work with GCIS to address the issues.  He appreciated the oversight role of the Committee and explained the role played by the SABC as the public broadcaster.

Ms Odette van der Haar, Chief Executive Officer, ACA explained that the information pack provided to the Committee included an analysis of the BBBEE certificate status of ACA members as well as data on BEE and gender representation.  The statistical data indicated that progress had been made since 2002.  The MAC SA charter was more comprehensive than the generic charter developed for the industry. The information pack included training statistics from the AAA School of Advertising.  The MACSETA was expected to play a significant role in future.

Mr Nkomo agreed to provide the Committee with more detailed supporting documents at future briefings.

The Chairperson said that the Committee required broader engagement with the advertising sector.

Mr Van den Berg pointed out that not all the Members of the Committee were present during the previous engagement with the advertising sector in 2002.  He suggested that future briefings included background information as well.

Briefing by the Advertising Standards Authority of South Africa (ASASA)
Ms Thembi Msibi, Chief Executive Officer, ASASA presented the briefing to the Committee (see attached document).

The presentation included an overview of the establishment of the ASASA; the mandate and functions of the organisation; the need for self-regulation by the advertising industry; the organisation of the Authority; the Code of Advertising Practice and the action that could be taken by ASASA.  Details were provided of the achievements recorded since 2002 and the impact of the Consumer Protection Act (CPA) on the ASASA.

The major challenges faced by ASASA included the refusal of Government entities to accept ASASA rulings that were not in their favour (for example the City of Tshwane was a municipality and not the capital city of the country) and the absence of Government funding.

The presentation was concluded with examples of advertisements that were considered to be offensive by complainants.

Discussion
The Chairperson complained that he was dealt with in a rude manner by a staff member of ASASA during a recent telephone call to the organisation’s offices.

Mr Kekana commented further on the rude behaviour of personnel and suggested that the ASASA placed a person with the necessary public relations skills in the position where the person was required to deal with members of the public.  He was under the impression that Tshwane was in fact the capital city of the country.  He asked if ASASA was able ` determine from the complaints received from consumers if advertisers were involved in criminal behaviour.

Ms Tsebe applauded the ASASA as the champion of consumers.  She remarked on the fact that the ASASA had less than 25 members of staff and suffered from a lack of both human and financial resources.  She asked what action was taken by ASASA to address the challenges.

Ms Msibi replied that the lack of human and financial resources was listed as a major challenge by the Authority.  ASASA was currently funded by the industry and although discussions were underway with the Minister of Trade and Industry, the assistance of the Committee in obtaining Government funding would be appreciated.  The previous Minister had promised that Government funding would be provided but the current Minister had deferred the matter.  The mandate of ASASA excluded the handling of complaints concerning the criminal behaviour of advertisers.  The Authority referred complainants to the appropriate authority.

Mr Nkomo remarked that price-fixing and collusion were serious matters.  ASASA was re-active rather than pro-active and its mandate was limited to adjudicating complaints concerning advertisements.

Ms Tsebe asked what the current funding model for ASASA was.

Mr Nkomo explained that companies operating in the print and broadcasting media sectors paid an advertising levy.  The levies were used to fund ASASA.  Minister Alec Irwin had agreed that ASASA should receive Government funding as the organisation was engaged in protecting the interests of consumers.

The Chairperson thanked the delegates for the briefings to the Committee.  The organisations previously reported to the Committee in 2002 on the issue of transformation and he conceded that the period elapsed between 2002 and 2011 was too large to allow the Committee to adequately track the progress that was made.  Ongoing engagement with the industry as well as with the Department of Communications was necessary to keep the transformation of the advertising industry at the top of the agenda of all the parties.

The meeting was adjourned.

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