Economic mapping of the Creative Cultural Industries & Measuring COVID-19 impact

Sports, Arts and Culture

20 April 2022
Chairperson: Ms B Dlulane (ANC)
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Meeting Summary

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In a virtual meeting, the South African Cultural Observatory (SACO) presented a briefing on the economic mapping of the Creative Cultural Industries in South Africa and measuring the impact of Covid-19 on the country's creative sector.

The Department of Sport, Arts, and Culture (DSAC) gave a brief description of SACO and the mandate it was hoping to develop through data produced by the entity. It was useful to identify key areas of intervention, and this included further hopes to continue a relationship with SACO after the end of its initial five years.

Committee Members were impressed with SACO's work and said they had learnt a lot about the creative industry. They asked how the broadcasting of local content and promotion of the work of artists could be advanced so that it benefited them. They were also interested in knowing if SACO had undertaken research on the digital technology and innovation space to assist in growing the cultural and creative economy. SACO responded that this was yet to be a challenge for the country, as less than 10% of households had access to fixed internet at their homes to stream various forms of content.

According to SACO's findings, the industry needed to be on the lookout for animation and video games, which were expected to be one of the large components of the sector in the next few years.

The Committee expressed the hope that they would be able to invite SACO again before the end of their term in March 2023. 

Meeting report

The Chairperson referred to the tragic KwaZulu-Natal (KZN) floods that claimed the lives of many citizens and left many displaced. She asked that they be included in the Committee Members’ prayers.

The apologies were received from Mr M Zondi (ANC), who had to attend a meeting with eThekwini councillors dealing with the KZN floods, and Ms D Sibiya (ANC), who was attending another meeting. Ms M Khawula (EFF) and Ms V Van Dyk (DA) both mentioned connectivity issues which could exclude them from the meeting. Lastly, both Minister Nathi Mthethwa and Deputy Minister Nocawe Mafu sent apologies, as the Minister was leading a South African delegation which would be part of an international event. The Deputy Minister was in KZN for post-flood assessments and reconstruction.

Overview of South African Cultural Observatory

Mr Vusi Mkhize, Director-General, Department of Sports, Arts and Culture (DSAC), provided a brief background overview of the South African Cultural Observatory (SACO). SACO was the research arm of the Department. It had been established to assist the Department in making the necessary scientific interventions based on the information researched on what was happening in the sector. The Minister's main objective in deciding to have this research was to understand the sector's contribution to the economy and how it could be further supported to achieve this. This included factors like the sector’s employment rate and overall performance.

Since then, SACO had been able to conduct successful mapping studies in crucial research areas and entered into partnerships with institutions like Nelson Mandela University. The project, which was initially set for five years, was set to be reviewed for renewal. The Department recognised the importance of the research, as it served to ensure appropriate intervention measures were put in place. For example, its research highlighted issues the Department had focused on in areas such as the Western Cape, Gauteng, and KZN. This then called for the Department to access participation from other provinces and equitably extend the same support.

Another matter made known to the Department from the research was the extent of the country's imports and exports, which indicated that the country needed to reverse the current trade deficit and ensure South Africans continued to consume more local products. More work needed to be done to influence citizens’ mindsets that "local was better" and consume more South African content. This would help create market access for entrepreneurs, and if more products were exported it would attract direct investment into the economy.

Mr T Mhlongo (DA) raised a point of order. He was concerned that the DG was verbally presenting a brief on the entity.

The DG expressed his apologies and said that an overview would be provided to the Committee.

Ms Unathi Lutshaba, Executive Director, SACO, introduced her team to take the Committee through the presentation.

SACO findings on economic mapping

Prof Jeanette Snowball, Chief Research Strategist, said SACO was a national research organisation funded by the DSAC and hosted by the Nelson Mandela University, with partner universities -- Rhodes, Fort Hare and the University of KwaZulu-Natal. Its mandate was to provide up-to-date policy and industry-relevant data on the cultural and creative industries in South Africa.

She explained what the Creative Cultural Industries (CCI) mapping study entailed and its relevance.

The purpose was to provide updated information on how the cultural and creative industries contribute to South Africa's economy in terms of gross domestic product (GDP) and its growth, employment, transformation, and international trade to establish a basis for evidence-based policy formulation.

SACO used three main research methods:

  • GDP contribution, which involved partial equilibrium modelling based on the CCI satellite account, embedded into a social accounting matrix for South Africa;
  • Cultural employment, which required analysis of StatsSA's labour force survey; and
  • International trade, using data from the United Nations' international Comtrade statistics via Trademap and the South African Revenue Service (SARS).

The study produced results relating to the contribution of the CCIs to South Africa’s economy, international trade, and CCI employment and transformation.

(Please see the attached presentation for details)

Discussion

In the previous meeting, the Chairperson first expressed her apologies. She had forgotten to introduce a new Committee Member, Mr S Jafta (AIC), and took the opportunity to welcome him before allowing the discussion to proceed officially.

Mr B Madlingozi (EFF) asked if there was some way the Department could ensure that more local music was played in the country instead of international music because a lot of money was flowing out of the country as a result. How was SACO assisting in making sure the country’s visual arts were traded more? If it was using the United Nations Educational, Scientific and Cultural Organisation (UNESCO) framework, and considering the constantly changing economy, what was SACO's current creative mapping of the industry based on? He suggested using a more recent framework rather than an old one.

Mr Madlingozi asserted that more young people were getting involved in the creative sector, contrary to SACO’s statement. Further, while South Africa was cut off from the world during the apartheid era, local music was consumed more and the artists benefited. This called for South Africans to look inwards and be careful that the music fraternity did not get too diluted and ensure young people did not become confused about where to go from here. It was also clear that South Africa traded more with the United States and the United Kingdom than with fellow African countries. Surely government should focus on trading with Africa to foster growth and not enrich other states?

Ms R Adams (ANC) asked what research SACO had undertaken on leveraging the digital technology and innovation space to grow the cultural and creative economy. What impact would the localisation policies for TV and radio have on domestic empowerment and geographic spread? Having calculated the value of the South African cultural and creative economy, what was the share of the informal sector, which was relatively vast in the creative sector? Lastly, what had been the impact of the relief funding provided by the government and other non-state financial support?

Mr D Joseph (DA) asked if SACO could provide more clarity on the informal industry because the informal sector was underestimated and could actually provide for at least five to six people per household to survive. Therefore, had research been done on how this sector fitted in the economy? Were there specific mandates for SACO to carry out, apart from their general research?.

He supported the "local is lekker" narrative but said another thing to consider was affordability since there was competition with the Chinese markets and other markets. There were differences between rural provinces and metros, so what advice did SACO have for the Department regarding how employment could be supported in those different areas within the sector? This stemmed from his observation that rural areas always came last regarding investments and opportunities.

Lastly, who were the beneficiaries of the sector’s exports? Was it the bigger companies or smaller role players, and how did the informal sector benefit?.

Mr Mhlongo asked for details of the composition of SACO and its budget. Had research been done on the impact of Covid-19, and what had been the outcome? Regarding the contribution from the Department to the sector, had different stakeholders been consulted when doing this research? If so, what sample had been used? How did South African cultural goods trade compared to other countries on the continent? Lastly, could a breakdown be provided of part-time and full-time employment?

Ms V Malomane (ANC) posed a question regarding slide 12 of the presentation about the GDP, asking how this information would guide the Department to provide support for cultural and creative workers. She asked about the impact of consumer spending on the producer price index (PPI), particularly where durable goods with a high purchase value were involved. What prediction could SACO make about purchasing these goods post-Covid-19, and, hypothetically, if purchases slowed down, what impact would it have on the sector?

Mr J Mamabolo (ANC) commented that South Africa had a trade surplus in the cultural and natural heritage trade. Natural heritage was a space that could be further developed, and virtual arts could be promoted. He asked SACO how the country could unlock this area of strength to ensure opportunities that benefited groups such as the poor, youth, women, and persons with disabilities. Secondly, what were the employment growth rate prospects, and what could be done to assist the industry?

SACO's responses

SACO responded to the question about the staff and said the Nelson Mandela University in Gqeberha hosted it. The core staff team, both part-time and full-time, was based in Gqeberha. There were 17 members, from the executive director down to the interns, but this excluded SACO's partners, as the University of Rhodes co-hosted it in Makanda, the University of Fort Hare in Alice, and the University of KZN. Each of these institutions had a liaison person with a team of researchers. SACO produced hundreds of reports since 2015, and these were reviewed and uploaded on the website for public access.

A Covid-19 impact assessment was conducted in May 2020 during the early stages of lockdown and another was done a year later. More in-depth detail on the impact of Covid-19 had been shared in greater detail through the presentation slides. The findings of studies conducted in early 2020 and the follow-up in 2021 had given SACO the following information:

  • An online survey was done by engaging with industry domains, with approximately 35% working informally (unregistered) and 65% working formally (registered) in 2020. The survey also included freelancers and those who were employers and their various modes of working.
  • The most crucial element of the study concerned business continuity -- in other words, to what extent could people continue with their business activities. The study results got better in 2021. However, there was a significant impact on continuity. Further, a question about continuity strategies was posed in the study. It had been observed that about two-thirds of services had moved online, highlighting the importance of the digital world.
  • Another finding of this study included how these businesses foresaw their recovery time. Most had responded to long-term periods.
  • There were also vulnerability scores taken across the various domains.

In response to the question about the UNESCO framework, she pointed out that though the framework was published in 2009, the data was not taken from 2009. The framework was more of a way of classifying the creative industry, and its usefulness allowed for international comparison, which was a better guide for policy frameworks.

On technology and digitisation, a project was conducted on the overlap between digital skills and creative inputs. A sample of firms had been interviewed -- mostly smaller firms -- and they had been asked what skill set they used. The findings were that a combination of business skills, creative skills as well as science and technology was used, and these were among the reasons for the success of these firms. Another interesting study that SACO did was about animation and video games. Although it may seem like a small sector, other reports signalled that this was a sector that would grow a lot in South Africa over the coming years through online markets.

SACO had made an effort to conduct workshops on intellectual property with copyright lawyers. The creative industry was beginning to explore how the industry could be more unionised and recognised so that their voices could be heard, as currently they were fragmented. This often resulted in it coming out in forms of protest instead of in a representative industry way.

Unfortunately, the question of part-time and full-time jobs was tricky to answer fully. This was simply because it was difficult to distinguish if the person was working full-time or part-time with freelancers. Usually, people in the creative industry had multiple jobs.

On the consumption of durable goods such as televisions, computers, and other equipment involving the internet, it was foreseen that internet access would be a challenge in terms of digitally expanding the creative industry. According to the household income and expenditure survey, fewer than 10% of households had fixed-line internet in their homes.

The transformation data was from 2019 because the labour market survey comes with a lag. The latest data for 2020 should be available soon and there would be an update. However, it usually did not change drastically on a year-to-year basis, but more in the long term.

The question of how the sector could be involved in poverty reduction through key interventions for the arts and crafts had been explored through studies in the rural provinces and municipalities and analysing patterns in the visual arts and crafts in provinces that did not have big metros. There was a dependency on tourism, so the production side of things would be possible in a rural province. A way to access the market would be through tourism and creating a space for crafts and hubs. However, this might still be constrained due to the impact of covid-19, as people could not fully afford to travel.

Dr Andre Gouws. Senior Economist, SACO, responded to the questions about trade. Through the Presidential Economic Stimulus package, Nelson Mandela University had been involved in developing various CCIs, and one of the components was exports. To be an exporter, one first needed information available through the internet and the Department of Trade and Industry (DTI). There were other trading avenues available through the private sector and government.

Events such as book fairs and other exhibitions were vital and something SACO wanted to look at closely post-Covid.

Concerning the African market, there was a huge growth in books going to the Southern African Development Community (SADC) countries in the last two to three years. South Africa was encouraged to actively pursue the book market and develop it in this area.

Regarding unlocking areas of strategy, there needed to be a balance between demand and supply and an assessment of market efficiencies. As for the impact of more local content, more local content was needed on the airwaves, but one needed to be careful not to scare off advertisers, so this had to be done accordingly.

Ms Lutshaba commented on the matter regarding the presidential stimulus package. SACO had received R30 million from the previous financial year. The purpose of the funds was to identify 100 unemployed graduates and give them work opportunities. A database had been received of various artists who were still developing and needed assistance to grow, not already well-known ones such as Black Coffee. They were then paired with these graduates. The graduates came from marketing, finance, business economics and law since they were essential skills. They underwent four months of the training programme with trainers who specialised in these fields to pass the correct information on to the artists, such as handling finances, how to market their products, and so forth. About 900 of the beneficiaries had received stipends, and it was R6 500 per month per person for four months. At the end of the programme, they underwent an assessment. The programme was concluded in January and a progress report was given to the Department. Currently, SACO was working to hand over the surplus funds.

DSAC's responses

Ms Lisa Combrinck, Acting Deputy Director General (DDG): Arts and Culture Promotion and Development, DSAC, responded to the question posed on the mandate and budget of SACO. SACO was conceived in 2011 and activated in 2015. A tender had been awarded for the research work to NMU, working in partnership with Rhodes, UKZN, and the University of Fort Hare. The contract was usually for a five period for R70 million, with the current contract expected to expire in 2023. Regarding the mandate, SACO sought to champion evidence so that it became the primary source for collecting key statistics. Secondly, the entity had to be able to inform key policy formulations. SACO had presented in strategic areas of the Department and also had its own online magazine through which it distributes information to the public.

SACO was located in the Arts and Culture promotion branch of the DSAC and was funded by the chief directorate of cultural development. It was also funded as one of the Golden Mzansi Economy strategy pillars.

Mr Mkhize referred to the issue of local content so that there was greater revenue for local artists. He said the Department must continue to drive the matter. There was the assurance of constant engagement between the South African Broadcasting Corporation (SABC) and the Independent Communications Authority of South Africa (ICASA). The SABC had confirmed they played more local music, particularly on the radio stations, and a breakdown was provided of the regional stations. The Department had also been in talks with the Department of Communication and Digital Technologies (DCDT) and the SABC, as the DSAC would like to explore having more TV channels dedicated to local music, creative arts and sports. In dealing with this, it also needs to be checked how the money could get back to the artists since often it was delayed payments which made artists suffer.

Regarding trade between Europe and Africa, there were good opportunities through the African Continental Free Trade Agreement (AfCFTA). There were protocols that needed to be finalised. If the issue of tariffs and quotas was waived, it would be easier for greater market access to the African continent through fewer taxes and import duties. There were opportunities provided to support artists through the Brazil-Russia-India-China-SA (BRICS) countries, which was a great opportunity for market access.

From the Department’s side, a steering committee worked with SACO. The research areas that the DSAC approved were made known to the committee.

On the trade surplus matter, more needed to be done to ensure a greater appetite for South Africa’s content and products. The intervention should be on how the goods got well marketed to ensure exports were increased.

Further questions

The Chairperson asked about the demographical composition from race, class and gender perspectives. Secondly, what were the distinct features and configuration of the cultural and creative industry in the Western Cape which enabled significant trade links? How could this be distributed to other areas in the country to address the inequality? What had been the leading factor in the sluggish performance of the creative economy? Why had trade stagnated?

Mr Madlingozi asked SACO to describe the breakdown by gender, race and age of the employers in the creative sector.

Ms Adams asked how the Department would use this report in its resource allocation to optimise the opportunities globally and grow the sector. Lastly, had the Department implemented a cultural diplomacy framework, and what outcomes had been realised?.

SACO responses

Regarding the demographical composition of artists and employers, these had been classified separately as combining them became complicated. SACO had produced a position paper on the cultural diplomacy matter to explain where the cultural observatory was from, who the main players were, and what kind of methods and approaches they used. A second report followed, which was a potential policy framework to implement cultural diplomacy, in which various interlinked Departments would have to work together.

DSAC responses

The Department responded on what gave the Western Cape a competitive edge and pointed out that many international films were usually shot in the Western Cape, which attracted lots of other filmmakers. The artists had greater market access to facilitate exports in terms of fine art.

The Chairperson expressed gratitude to SACO for the information provided. She expressed a desire to invite them again before the current Committee’s term ended in March 2023.

Committee matters

The Committee would be going on a leave period between 25 and 29 April. The next meeting was scheduled for 3 May for a briefing by the Department on its third quarter performance report.

Permission would be granted to the Committee to sit for a meeting on 4 May 2022 for a briefing on the Department’s report to prepare for the budget vote report.

The Committee secretary went through the programme for the remainder of the term.

Committee Members raised matters regarding oversights visits to be added to the Committee’s second quarter programme.

The Chairperson said all proposals would be looked at.

The Committee adopted the programme.  

The meeting was adjourned.

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