Address by the Minister of Arts and Culture, Mr Nathi Mthethwa, at the World Economic Forum: Unleashing the Economic Potential of the Sector
Global overview of the creative economy
The creative economy is one of the most rapidly growing sectors of the world economy, not just in terms of income generation but also for job creation and export earnings.
A much greater proportion of the world’s intellectual and creative resources is now being invested in the culture-based industries, where human creativity and innovation, at both the individual and group level, are the key drivers of these industries, and have become the true wealth of nations in the 21st century.
Culture is a driver of development, led by the growth of the creative economy in general and the creative and cultural industries in particular, recognised not only for their economic value, but also increasingly for the role in producing new creative ideas or technologies, and their non-monetised social benefits.
Culture also enables development. It empowers people with capacities to take ownership of their own development processes. When a people-centred and place-based approach is integrated into development programmes and peacebuilding initiatives, when interventions in fields ranging from health to education, gender empowerment to youth engagement, take the cultural context into account, including diverse local values, conditions, resources, skills and limitations, transformative and sustainable change can occur.
The potential of culture as a driver of development is evidenced by data published by UNCTAD in May 2013, which shows that world trade of creative goods and services totalled a record US$ 624 billion in 2011 and that it more than doubled from 2002 to 2011.
The average annual growth rate during that period was 8.8 per cent. Growth in developing-country exports of creative goods was even stronger, averaging 12.1 per cent annually over the same period.
Moreover, United Nations Educational, Scientific and Cultural Organisation (UNESCO) work over the years has demonstrated that when the creative sector becomes part of an overall development and growth strategy, it can contribute to the revitalisation of the national economy through investments in identity, innovation and creativity which can help to build new development pathways for individuals, local communities and countries.
These new pathways are constructed when they are nurtured within an enabling environment based on the fundamental values of respect for human rights, equality and sustainability. The contribution of culture in this capacity results in inclusive social development, inclusive economic development, environmental sustainability and peace and security.
Many of these pathways are to be found at the subnational level in cities and regions as the next frontier of knowledge generation, where specificities and policies at local levels can be practically promoted in communities, cities and regions.
This is the global context in which the South African (and the African) creative economy finds itself in the second decade of the 21st century.
Overview of the South African creative economy
Key results of the 2013 National Mapping Study
In order to understand the scale and scope of the creative industries and to assess the economic impact of the sector a National Mapping Study was conducted by the Department of Arts and Culture. The aim of the research was to explore; what would our future picture of success look like? What would be the valid measures or indicators of success?
In order to answer these questions, the mapping study had to establish a clear understanding of the value chain and how wealth and income are created, the size and economic contribution of the creative industries in South Africa the critical pressures and key trends to inform policy and programme decisions.
The methodology and survey instruments were based on best practice models from Colombia, the United Kingdom, the Gauteng Creative Industries Mapping study and the national Visual Arts Mapping Study. The research was also informed by the UNESCO Framework for Cultural Statistics to ensure that the information generated by the study would be comparable with the statistics generated elsewhere in the world.
To generate the macro-economic data such as contribution to the GDP, standard econometric tools formulae and methodologies were used. Through the cultural observatory, which will be hosted at Nelson Mandela University in Port Elizabeth over the next three years, the mapping studies will be conducted every 2-3 years.
Some of the headline findings of the study include the following:
Contribution to GDP
The creative economy contributed R90, 5 billion directly to the country’s GDP in 2013/2014, driven primarily by the design and creative services, cultural and natural heritage and information and information, books and press clusters. Relative to the total RSA GDP, the creative industries sector contributes 2.9% of GDP. This is similar to benchmark countries Chile and Australia but far below Brazil, for example.
The fiscus can expect to receive R24.84 billion per annum in tax revenue as a result of the business economy generated by the creative industries sector.
Employment
The creative economy accounted for a total number of 562,726 jobs in 2013/14. Between 2012 and 2013 employment levels were largely stable, with small decreases in the number of part-time and contract employees and a slight increase in the number of full time employees. The design and creative services and cultural and natural heritage cluster have the largest employment impact, contributing a combined 54% to total employment.
Relative to employment in the whole of the South African economy, the creative economy contributes 3, 6% of total employment.
Supporting Women and Young People
The research showed that over 50% of enterprises in the sector are black-owned and over 30% are owned by young people. Just fewer than 60% of organisations are owned by men.
There is an almost equal split in employment between women and men and the majority of employees are black South Africans. Furthermore, the sector provides significant opportunities for young people; the majority of employees are below the age of 35
Market Profile
Over 70% of respondents in the study reported their primary source of income is own revenue generated from the sale of products and services, however just over a third reported that they had received government grants; an indication of the ongoing importance of government financing of the sector.
The majority of organisations (66%) reported that their markets are locally based households and individuals, mainly within their current province or in Gauteng which emerged as a major market hub in the study. Only 18% of organisations reported that they exported their products.
Challenges and obstacles
The primary challenges facing the creative economy, consistent with many studies over the last few years, is a lack of financial resources, lack of access to technology and a lack of access to markets.
The Department of Arts and Culture, in collaboration with other government stakeholders, the private sector and civil society will be working to alleviate these challenges so that the sector can make a major contribution to radical economic transformation.
What is our strategy for unleashing the economic potential of the creative sector?
Mzansi Golden Economy
The Mzansi Golden Economy (MGE) strategy was initiated in 2011 to create cross-sectoral strategic investment mechanisms to overcome significant challenges with regard to job creation, market and audience development, skills development and research identified through sector research processes and also consultation processes with creative industry practitioners, businesses and organisations. The core of the programme comprises 10 work streams grouped as a virtuous cycle of value creation, audience and market development and value circulation.
These are as follows:
- Cultural Events
- Touring Ventures
- Public Art
- Artists in Schools
- Mzansi Golden Market
- Cultural Observatory
- Cultural Precincts
- National Academy for the Creative Industries of South Africa (NACISA)
The local economic impact of these workstreams is being felt. Research conducted through our own monitoring and evaluation processes showed that the major festivals supported through the MGE Cultural Events incentive are catalysts for economic development, given that artists are reliant on events for income and economic sustainability.
In 2014/15, the DAC supported 22 national and regional flagship events including the National Arts Festival and Cape Town international Jazz Festival, and a range of regional festivals as such the Kalahari Desert Festival in the Northern Cape, Mpumalanga Comes Alive in Mpumalanga, MACUFE in the Free State and the Marula Festival in Limpopo.
These events are catalysts for economic development given that artists are reliant on events for income and economic sustainability.
Through an ongoing monitoring and evaluation programme, using surveys and other instruments, the DAC has been able to determine the impact of these some of these events on the local economy. Some of the most interesting findings of this research are that:-
- Local audiences in most cases represent up to 50% and more of the audience base, demonstrating that these festivals and events provide significant opportunities for locally based audiences to access arts and culture. The events provide significant opportunities for domestic tourists as well.
- A very high number of these visitors were repeat customers of the festivals and on average 95% indicated that they would return for the festival in the following year.
- Overall, based on this research, the National Arts Festival contributed R138,4 million to the local economy, consistent with the festival’s own research and the Cape Town International Jazz Festival contributed R129,2 million. MACUFE contributed R64,3 million to the economy of Bloemfontein, the Marula Festival contributed 20,8 million to the local economy of Phalaborwa and Mpumalanga Comes Alive contributed R11 million to Mbombela.
In 2015/16, the focus of MGE has incorporated major new initiatives including:
Creative Arts Incubators
The establishment of incubators to nurture entrepreneurs and produce local content, facilitated by a dedicated venture capital fund. These will be implemented in the first phase largely by the DAC Performing Arts Institutions.
To date we have launched three incubators. These are the Casterbridge Academy in Mpumalanga on 1 April, the PACOFS incubator in the Free State on May 15, and Artscape in the Western Cape on May 18.
On May 20, we will be launching the State Theatre and in June the Market Theatre and Playhouse Company incubators. The total number of individuals incubated is 408.
These incubators are a very important tool to ensure that we create local content and unleash the economic potential of the creative sector.
National Art Bank
These incubator programmes will be supported by a National Art Bank. A detailed study was conducted to identify the most appropriate institutional model for the project and to develop key processes and policies such as the commissioning and procurement of art work.
Based on this study, the National Museum in Bloemfontein, which houses the Oliewenhuis Art Museum, was identified as the most appropriate host in the pilot phase of the organisation. An agreement has been reached with the Museum and in the 2015/16 financial year, the Art Bank will procure artworks and host a national exhibition to encourage government and private sector players to rent these works
Mzansi Golden Market
The basic architecture of the Mzansi Golden Market (MGM) has been established. We will shortly issue a call for a database of service providers to government as a first step to empowering people. The second step is for government to provide opportunities for people captured in the database.
This database will be used as a tool to keep track of bursaries we are giving people and will provide opportunities for recipients of bursaries to engage with institutions and the DAC.
In the 2015/16 budget year we will be launching an audience loyalty programme as part of the MGM.
The benefits of market development for the sector are enormous. For example, language practitioners that compete will for the first time be given opportunities in the entire public sector (which will in turn have a viable database to tap into).
Audience development
The arts marketplace of the future requires knowledgeable, appreciative consumers. This will require programmes to develop future audiences, starting off with the appreciation of the Arts as nurtured at school. There is an unequal distribution of Arts and Culture education and a questionable quality of arts and culture education where it is taught. There is a crucial requirement for the future mainstreaming of Arts & Culture education in South Africa.
Venture Capital Fund
An integral component of the Incubator programme and Mzansi Golden Market is the establishment of a fully-fledged Venture Capital Fund
Within the 2015/16 budget year we will invest R20 million to kick-start the process.
Incentives or regulatory pressure to drive corporate contributions
There are no tax incentives to encourage private sector contributions to the Arts. The dti’s Enterprise Development Charter does not make allowance for contributions to artists who are in effect small businesses within the arts. There needs to be a greater focus on large companies becoming active patrons of the Arts.
We are in the process of engaging with National Treasury to look at how tax incentives can unleash the creative sector through the tax system. This is ongoing work.
Africa Month
The initiation of Africa Month in May 2015, the inaugural edition of which has just ended. The project aims to promote trade, exchange and celebration of Africa creative industries products and services.
Enquiries:
Mack Lewele
Cell: 082 450 5076
