South Africa's homegrown film sector is struggling

Country flourishing as a shooting destination

The news could not have been worse.

Just after principal photography wrapped in November on "Hansie," one of the more intriguing projects to shoot recently in South Africa, the producers learned that a major source of their funding had disappeared. Suddenly, they had to scramble to finish their film.

"Unfortunately, the funding that was supposed to come through didn't," says producer Frans Cronje. Since then, "it's been a roller-coaster ride."

That may be an understatement. As Cronje struggles to piece together the money for his postproduction work before a planned September release, "Hansie" has become something of an alarm bell for local filmmakers.

"Production was started before the funds were secure, which is a cardinal sin in our industry," says one leading South African film executive. "Word, of course, will spread and make new private investors much more wary of the industry."

Just as South Africa seemed to be increasing its profile on the global movie scene, with an Oscar for 2005's "Tsotsi," a burgeoning infrastructure and top-notch crews, "Hansie" was a reminder that -- in terms of indigenous moviemaking -- the country still has a long way to go before it can join the ranks of other leading filmmaking nations.

As so often, economics is at the heart of the matter.

"You cannot make a film for local consumption here," says Philip Key, managing director of production services company Moonlighting. "There just isn't enough money in the system; the audience isn't big enough; the broadcasters don't pay enough; and there is very little soft money for local production, particularly with respect to script development."

What is so maddening for insiders is that South Africa is flourishing as a destination for foreign film projects, even as it is floundering when it comes to its own.

Helped by some terrific rebates and a weak currency that is one of the few to have declined against the dollar, the euro and the pound in recent years, South Africa is riding high as a venue for foreign filmmakers.

Hal Sadoff, who heads ICM's international and independent division, says he is currently putting two movies together that will shoot in South Africa, where, in addition to rebates, filmmakers can count on "very good and experienced crews."

Big-budget American ventures like "10,000 BC" and "Starship Troopers 3: Marauder" have shot there over the past year, and European movie companies appear particularly eager to use South Africa's locations and English-speaking crews, as do foreign commercials makers.

The proof: Key says his company alone has seen a rise of 12% in the number of commercials it has made this season.

While Americans have been less visible in South Africa than before (largely because the rich subsidies offered by almost all the U.S. states have induced them to shoot on native soil), many South Africans believe that will change when Hollywood executives become aware of just how low the rand is against the dollar.

Indeed, the currency that just two years ago traded at 6 rand per dollar is at press time trading at 7.6 -- a decrease of almost a third.

Add that to recent changes in the government rebates -- changes that are particularly beneficial to lower-budget films -- and filmmakers may begin to see even more advantages to shooting in South Africa over staying at home.

But no matter how generous the rebates are, producers are still left with the problem of raising the rest of the money.

With few film financing entities and almost no private investors, the indigenous South African film sector is in a state of near paralysis. And the few private investors who have risked their money on local films have done so badly that their experiences do not bode well for future investors.

Such was the case with Ronnie Apteker, an investor who made his money through an information technology company, Internet Solutions, then invested in features like 2005's "Crazy Monkey Presents Straight Outta Benoni" and "The Flyer" as well as last year's "Footskating 101."

"The budgets of the films I have been involved in range from as low as 2 million rand ($264,000) to over 10 million rand," he says. "Most of them did not recover their budgets."

In his case, just breaking even is not an enticing prospect, he says, because the high interest rates in South Africa mean that a financier can just leave his money in the bank and earn a substantial gain. A movie, he says, must make a 200%-plus return for it to make any financial sense.

"There's no evidence of any South African film doing this," he adds. "My experiences to date have been largely filled with financial loss and a lot of disappointment and frustration. Numbers never lie."

Producer Tendeka Matatu was luckier in that he was able to find one investor who covered the entire cost of his feature "Jerusalema," which was sold recently during the Berlin Film Festival.

The movie, which chronicles the rise of a self-made millionaire from the slums of Soweto and shows how crime has come to pay in South Africa, stars some of the country's leading actors. Even so, Matatu says, the project faced considerable difficulty raising money in South Africa, including from the government.

"It's a pity," Matatu notes. "South African soft money or tax breaks would have helped in reducing the investors' risk and provided for a more attractive upside."

"We have failed to really develop a homegrown feature industry," adds David Wicht, CEO of Film Afrika, a production services company. "So the only way we can make films is by resorting to international co-productions."

A case in point: the recently completed "Goodbye Bafana," the real-life tale of Nelson Mandela and his former jailer. "Even though that was thought of as a South African story, it became an international film, with American and German actors," Wicht explains. (The film stars Joseph Fiennes, Dennis Haysbert and Diane Kruger.) "That's the realistic way to get South African stories told at the moment."

In doing so, of course, "they cease to be domestic product and become the product of whoever is putting up the bulk of the money."

Will this change? Perhaps not, at least in the near future. But insiders see hope in two recent developments.

First, four new licenses have been granted for television stations, and each will have a quota of indigenous material it needs to buy. So far, South African television has largely bought mini-series or finished product, rather than investing in movies upfront, but the added stations may lead to a change in that strategy.

Second, private investors are moving ahead with a brand-new studio complex, the Cape Town Film Studios (formerly known as Dreamworld), with four soundstages totaling 7,000 square meters. The 410 million rand complex will open in 2010, not only providing resources for foreign filmmakers, but also giving opportunities for native filmmakers to work on projects and access local soundstages.

Whether all this will be enough to give indigenous moviemaking the jump start it so badly needs is open to question. For the time being, the struggle to make truly South African films continues unabated.

"We're a small industry building an audience and an awareness of South African film," Matatu says. "It's not the easiest place to make movies. But it's certainly a fascinating place."

Nikki Temkin contributed to this article from Cape Town.