South Africans yearn for a film industry to call their own

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CAPE TOWN, South Africa -- From its first indigenous production, "The Great Kimberley Diamond Robbery" (1910) through "White Wedding," this year's official submission for the best foreign-language Academy Award, South Africa's homegrown film sector has always been ripe with promise.

In recent years, that promise has turned into real success, most evident when Gavin Hood's gritty drama "Tsotsi" took home the foreign-language Oscar in 2006, and when international blockbusters like 2006's "Blood Diamond" tapped the country's stunning locations and generous subsidies.

This year, South Africa is back on the map with the critically lauded sci-fi thriller "District 9," which has racked up $114.9 million at the U.S. boxoffice alone and likely will be a contender at the Academy Awards. While the picture has generated controversy in South Africa, where insiders find its equation of a sci-fi future with apartheid troubling, it has reminded outsiders of how much quality can be put onscreen with a small budget and a South African shoot.

With all this good news, what could be wrong?

Despite a host of positive elements -- like terrific locations, well-regarded crews and continuing tax breaks -- South Africa's local film sector has been battered by a global economic slump and strong local currency that together have helped plunge the influx of foreign-funded projects.

Nor are foreign films the only ones that have cut back. "Local filmmakers are fighting the good fight, but are still struggling," notes Ian-Malcolm Rijsdijk of University of Cape Town's Center for Film and Media Studies.

For David Wicht, CEO of Film Afrika, the South African film industry has been hit by "a perfect storm. There are four key funding pillars required for local films: broadcasters, private equity, state support and distribution. Three out of the four are in deep trouble."

There was a time when local filmmaking appeared poised to reap the benefits of a booming broadcasting sector, following the abolition of apartheid. In the early 1990s, hundreds of production companies sprang up to service the five local broadcast channels, as well as local cable stations. But after years of mismanagement, in June the state-owned South African Broadcasting Co. collapsed under the weight of a sea of debt, infighting and top-level resignations. After that, it summarily canceled the bulk of all independent commissions.

This essentially severed the umbilical cord to the majority of local producers, cutting them off from a funding supply and resulting in closures, mass retrenchments and even hunger strikes. At press time, the SABC was all but immobilized and seeking a bailout from the government.

Elsewhere, broadcasters ETV and pay channel MNET, both under no real political pressure to increase local content, remain uninterested in indigenous films. Insiders believe the local broadcasting regulator, the Independent Communications Authority of South Africa, has failed to use its authority to elicit a commitment from broadcasters to fund local films.

"We need strategic government intervention," says Jeremy Nathan of DV8 Films, producer of well-received local fare like 2006's "Bunny Chow" and this year's critically acclaimed drama "Shirley Adams." "One which forces distributors and broadcasters -- by law -- to co-finance and distribute local films. They will not do it of their own volition."

First and foremost on the path to change, according to Michael Murphey of Kalahari Pictures, which co-produced "District 9," is legislation backed by political support and conditions to attract more local financing. "Then it will be over to local filmmakers to tell honest stories that South Africans and audiences around the world want to see," he says, adding that "District 9" has proved it possible to produce a global hit with a distinctively South African voice.

Such legislation may eventually come from a government that has made the film industry one of its top economic priorities, but it has not happened yet, making most locals pine for a brighter future.

Rita Mbanga of Sunrise Prods. is one of the few to seem optimistic, or at least to find an unexpected upside to the current woes.

"The unfortunate situation with the main local broadcaster has shaken up the industry a lot, which is such a shame because it should ideally be a platform for local filmmakers," she says. "On the other hand, hopefully now it will begin to grow and shape up the way it needs to be in order to foster local filmmaking."

Wishful thinking? Perhaps, but even if broadcasters ramp up efforts to support local filmmakers, the reality is that production will have a hard time flourishing when exhibition in South Africa remains problematic.

One of the ongoing legacies of apartheid is that South Africa has few cinemas and therefore a small moviegoing audience. While the country has on average 25 million visitors at the boxoffice per year (from a population of more than 40 million), that pales by comparison with, say, Australia, which has more than 125 million cinema admissions a year from a population of 18 million -- and skeptics might note that even Australia cannot sustain a local film industry without heavy state and television support.

South Africa's minister of culture, Lulu Xingwana, during a recent visit to The Hollywood Reporter's Los Angeles office, said she hoped that screens soon to be set up in villages across the country to facilitate viewing for the 2010 World Cup soccer competition might eventually become a breeding ground for proper cinemas. But such a development may be years away at the very best.

She also pointed out that South Africa is doing much to pave the way for a strong indigenous industry, helped by a joint educational venture with the University of Southern California's film school that seeks to educate future filmmakers.

As for exhibition, local producers are cautiously hopeful that the digital revolution may eventually provide a solution to rising costs and stagnant boxoffice.

Says Rijsdijk: "Local distribution seems to be less of a problem than it used to be, but I also think the digital age is changing the viewing habits of younger viewers. I think South Africans will watch South African films, but maybe not at the cinema."

For passionate local filmmakers intent on using cinema to tell uniquely South African stories, however, that prognosis is frustrating.

"We have no shortage of amazing stories and we have hugely talented storytellers, actors and technicians," says "White Wedding" director Jann Turner. "What we lack is a sizable cinemagoing public that would make it worthwhile for financiers to put lots of money into a movie industry."

And there lies the rub: In South Africa, local distribution revenues barely cover prints and advertising costs; and DVD sales showed signs of promise, with substantial growth in recent years, but slumped as the economy contracted. Additionally, sales of completed local films to local broadcasters are treated the same as foreign acquisitions, with pitifully low license fees.

South Africa has, on the face of it, an attractive capital allowance (section 24F), whereby film investors can deduct their investment in films from pretax income; however, because of abuses in the 1980s, tax authorities have systematically attacked taxpayers who make use of 24F, scaring off private equity and undermining 24F's effectiveness.

One bright spot is the expenditure rebate from the Department of Trade & Industries, which offers 35% on the first R6 million ($820,000) of expenditure and 25% thereafter. The DTI continues to seek means of encouraging local films and recently made it possible for local film producers to draw their rebate in advance (previously it was paid out after expenditure).

But the key state organization created to develop the local film industry, the National Film & Video Foundation, has been woefully underfunded and only manages to support the development of a few local scripts and make small investments (about $100,000) in a few films that have local directors and writers.

To make matters worse, the massive state-owned bank and equity investor, the Industrial Development Corp., has been largely absent from the film industry for a few years after a string of disastrous investments.

That's why, even though a handful of South African films are made each year, the key to many is foreign funding -- which supported "District 9" (American funding), "White Wedding" (U.K. funding) and the December release "Disgrace" (Australian funding).

"The main challenge is financing and the reason for that is the size of the market," says Kevin Fleischer, of Stepping Stones Prods., the local production company behind "White Wedding."

But if the South African film industry's hopes are pinned on foreign vehicles at the expense of their own, that may be a false dichotomy, Wicht argues.

"Any solution needs to keep both sectors strong and flourishing," he says. "To focus on one at the expense of the other would be shooting ourselves in the foot."

But, he insists, "The two are utterly, mutually interdependent. If one sector fails, the whole industry suffers."
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