Financing the local film boom


In the past year a record number of South African films hit the big screen, making it a bumper year for the local film industry. Traditionally some of the biggest hurdles facing filmmakers have been finding the funds to turn their projects into reality.

Screen Africa asked some industry insiders whether a growing confidence in the local industry is making it easier for local films to get the financing they need.
The most influential factor that encourages the growing number of local films is the Department of Trade and Industry (DTI) Film and Television Production Incentive. According to Karin Liebenberg, Director of Incentive Administration at the DTI, they have seen more filmmakers embracing the DTI rebate since they lowered the threshold from R25m to R2.5m in 2008. “In numbers there’s a big shift,’ says Liebenberg.

The growth in the number of films approved for rebate since 2008 is remarkable. Between June 2004 and January 2008 16 South African productions and seven co-productions were approved. Between February 2008 and March 2011 this swelled to 93 South African productions and 38 co-productions. The total amount committed for local, foreign and co-productions more than doubled from R370m to R751m during the same period.

According to Liebenberg they receive extremely positive feedback from the industry with regard to the impact of the rebate. “If it’s administered well it gives you the certainty you need to finish your production,’ says Liebenberg. “It’s a large amount of money and it’s working well.’

What’s not working well, according to Liebenberg, is filling the gap of the funds not covered by the incentive. “Many productions are approved but still can’t find the rest of the funding. This is where the bigger banks and the IDC need to fill the gap.’
She says there is money to be made in movies, but the financial success of a film will depend on how suitable it is for local audiences. “Not every film will make money, but definitely more and more films will start making money.’

The rebate applies to productions with a budget of at least R2.5m, and it pays back 35% of qualifying production expenditure up to R6m, and 25% of expenditure above R6m with a maximum rebate of R20m. The rebate is paid in instalments during the production process and this depends upon reaching certain milestones.

Liebenberg also confirms that the DTI is in discussions with the Documentary Filmmakers Association to make the incentive more accessible to documentary makers, whose shorter productions and lower budgets often disqualify them from the rebate. She says while they are willing to listen to the concerns of the industry, they have to follow a process and address capacity problems before a decision can be made in this regard.

Developing new talent

The National Film and Video Foundation (NFVF) provides funding for the development and production of documentaries, features and short films. The head of production and development at the NFVF, Clarence Hamilton, says an ongoing campaign to secure more funding for the industry was more focused and urgent last year in the light of the collapse of public service broadcaster SABC. The NFVF recently announced that it will receive an increase in government funding over the next three years. The extra allocation of money will have tripled the NFVF yearly budget by the third year.

According to Hamilton the NFVF already funds an increasing amount of productions. In September 2010 an unprecedented six feature scripts were approved for development while seven feature films and four documentaries were approved for production, in one sitting. This was attributed to the strong and productive NFVF development programme. However this caused some frustration, as some productions were approved but could only be financed later. Hamilton adds that many applications that couldn’t be approved due to funding issues will be revisited later this year.

Creating a better investment climate

The NFVF is also part of a group of organisations and companies that have been in “very positive’ discussions with the National Treasury about Section 24 F of the Income Tax Law. This clause, meant to give tax incentives to film owners, was notoriously abused in the past leading to questions about the integrity of the incentive. Therefore the incentive is very seldom used. The industry group has been lobbying the treasury to make some changes to make it more accessible. According to Hamilton this will create a much better investment climate.

He also sees more private investors getting involved as the industry reputation of being a high risk investment starts to change. He says there’s a transformation in the industry with more filmmakers writing movies for audiences, which will lead to films making more money.

Among the projects that recently received NFVF funding for either development or production are Mama Afrika (about the life of Miriam Makeba); The Whale Caller; My Zulu Wedding; Stockholm, Zululand; Otelo Burning; Skeem; Zambezia; and How to Steal 2 Million. These projects are currently in different stages of development, pre-production and production.

Working towards a sustainable industry

While the Industrial Development Corporation (IDC) has come under fire for not funding a sufficient amount of local productions, IDC Media and Motion Pictures Business Unit head Basil Ford says much of the criticism has been based on hearsay that is: “compounded by some disgruntled filmmakers whose projects were rejected by the IDC.’

Says Ford: “Critics primarily based their income on earning fees through the production process without enough consideration for recouping capital for the IDC.’
He says this approach is unsustainable.

The IDC is pleased, says Ford, with its process of engagement in the industry, and has clarified its criteria and required documentation process to the point where it has approved funding to a number of filmmakers.

According to Ford the IDC has funded 16 films over the past three years. This was done by providing funding through a range of financial products from loans to cash flow of pre-sales or gap funding to equity investment. “IDC is quite flexible in its approach and the type of funding will usually depend on the development impact of the project and the needs of the film.’

Among the films recently funded by the IDC are the Leon Schuster box office hit Schuks Tshabalala’s Survival Guide to South Africa, Winnie, Zambezia and Khumba.
Ford says there has been a significant increase in the number of applications from local filmmakers for locally developed films, particularly in the more commercial genres such as comedy, thriller and action films. He says applications for funding low budget films have also increased over the past three years, with a corresponding reduction in the applications for high budget co-production films.
“It is also positive that we are getting applications from filmmakers who have previously not considered funding from IDC. Our close working relationship with the NFVF has led to many young black filmmakers applying for funding to the IDC for the first time.’

More to be done

Paul Raleigh, director at Film Finances, says he’s very pleased to see that local films are performing better. “However we still need to do a bit more to consistently celebrate that magical event called “net profits’,’ says Raleigh.

Film Finances South Africa helps filmmakers by providing investors with a Guarantee of Completion, which protects them from budget overruns and ensures that the film is delivered to the distributer or sales agent. The DTI is a beneficiary to the Completion Bond and because of this they release the rebate funds to the production based on predetermined milestones.

Raleigh says these milestone payments make access to funding easier, but many films produced locally have the same investors. He says that to attract new funders films need to be commercially successful.

According to Raleigh they go the extra mile to assist producers to satisfy the requirements of a completion guarantee.

“It’s important to remember that we are in the business of providing completion guarantees and not in the business of not providing them,’ Raleigh explains. While the track record of a producer applying for a completion guarantee is important, “where the producer is not experienced, we put together a team that can do the job, and at the same time encourage first timers into the industry — where sensible — into key positions,’ says Raleigh.
Some local films recently serviced by Film Finances include Skoonheid, Zama Zama, Skeem, Otelo Burning, Winnie, How to Steal 2 Million, Spud, Liefling, Smoke and Ochre, Platteland and A Million Colours.


Please enter your comment!
Please enter your name here