Tax fillip for SA film

16 August, 2004

South Africa’s film industry has received a major fillip from the government, which is offering some $40-million in tax incentives to local and foreign film companies over the next three years.

The incentives are intended to promote South Africa as a prime filming location and, according to Trade and Industry Minister Mandisi Mpahlwa, “secure South Africa’s place as a major place of investment, like Spain, New Zealand, Canada, the UK and India.”

The total value of the South African entertainment industry is about R7.7-billion, comprising film and television production, broadcast, cinema and interactive industries. Of this, the local production industry accounts for approximately R1.4- billion.

Productions with budgets exceeding R25-million ($4-million) will qualify for tax rebates under the programme. Feature films, documentaries, television movies and drama series will be eligible for tax rebates – but reality series and, unsurprisingly, pornography will not.

According to the department of trade and industry, production costs in South Africa are up to 40% lower than the United States and 20% lower than in Australia. But it says despite the country’s many competitive advantages, the film industry’s development has been stunted by South Africa’s apartheid legacy.

Shooting in colour…

Although the South African film industry has a long history, until 1994 it was largely inward-looking and culturally exclusive. The country’s first democratic elections meant a rejuvination of the political, economic and cultural landscape and new challenges and opportunities for the industry.

An increasing number of feature films, television series, documentaries and commercials have been produced in South Africa since 1994, which has had a positive impact in the local industry. But the Department says there’s much room for improvement. Benefits of local production have been largely restricted to improving “certain technical skills only” and attracting only “some” investment into the sector.

A critical driver to its growth has been the inclusion of culturally distinct content and the development of niche markets worldwide. In this way, a number of other countries such as India, the UK, Spain, Australia, Canada and New Zealand have emerged as major movie producers.

Consolidating…commodifying…

The South African film industry has been characterised by increasing consolidation driven by the need to generate economies of scale. As a result, about 15 production companies produce over 90% of all feature films and television productions.The local film industry is clustered around two key locations – Cape Town and Johannesburg, and there are around 150 registered producers in the country.

The National Film and Video Foundation (NFVF) was established in order to increase the local content quotas for television, which had a positive impact on the growth of the local industry. During 2003, 24 films were produced in South Africa. The NFVF invested in 16.

However, the department says growth in the sector is dependent on “inward investment” as well as the development of local content as a tradable commodity – and it is in these areas that it hopes to make a contribution.

Major films produced in South Africa include ‘The Gods Must be Crazy’, ‘Cry, the Beloved Country’, ‘The Piano Player’ and ‘Sarafina’. Salma Hayek and Colin Farrell are currently in the country filming ‘Ask the Dust’.

SouthAfrica.info reporter