Hi guys, we found a very interesting article about creative funding.
Creative industry players — entertainment and art — in almost all African countries single out lack of funds as the major hurdle in their quest to promote and sustain the industry. They say both governments and the private sector do not have policies on the industry and neither do they consider it a priority.
Yet this industry is a multi-billion dollar spinner on other continents.
The 7th Congress on East African Cinema held during the 2010 Amakula Kampala International Film Festival recently, brought industry players from the region together to deliberate on how to attract financing from the banking industry and other lenders.
According to Nuwa Wamala-Nnyanzi, the chairman of the National Arts and Crafts Association of Uganda, an artist must make a case for what he or she produces and its worthiness before a financial institution can grant a loan. One has to prove its potential and relevance to a prospective investor or collector. “If I bought your piece of art today, will it gain value over a period of time? Banks therefore want to know how they will recover their investments.
“Banks are also looking for intellectual property rights issues, intellectual entertainment or nourishment, psycho-social values and fiscal value (re-saleable or mortgage value). For this to happen there has to be government support for the arts industry right from its infancy through the education system,” says Wamala-Nnyanzi, a visual artist and consultant.
“We also need to work on our integrity and good image because it is only the credible ones that will get financed,” he observes, adding that: “Banks need to support us through long-term financing, but governments have to recognise our industry first by subsidising us as it is done in South Africa. I operate an art gallery without subsidising my income like running an Internet café on the side.
“Our products are visual and unique because you cannot buy a painting every day, unless they are gifts. The profiles of buyers of my works also keep changing — it is not the same consistent buyers. I am not able to track them and tell their wants,” he says.
Steven Gathongo, head of credit at KCB Uganda Ltd, emphasized the importance of the credibility of the borrower, who has to belong to a group or company in order to qualify for funding.
“We need to predict a potential borrower’s cashflow. Is he signed up to a producer? Do you have an events manager? We want to see if your money is coming in a very specific way. If you are selling one CD this month and the next one after six months, it becomes difficult to get finance,” Gathongo said, adding: “A bank loan is there to boost your project and income because you will have risked your money in the initial stage.”
The public in general and the finance sector often take the creative industry as not being a serious business, though the industry has proved to be a big revenue generator for the economy provided there is an infrastructure to support it.
“The players have to package and organise it as a serious business to be guaranteed of financial support. It is hard to finance somebody performing live. Selling records is much more predictable compared with live performances because with the latter it is hard to tell the attendance numbers. For example, broadcast rights for international football are more profitable than gate collections. Piracy should be fought in all its forms so that artists can earn more from the sales of their products,” Gathongo said.
Most financiers come in for purposes of advertising and marketing products. The potential financiers also look out for trade volumes to act as security and a guarantee to plough back their investment. Governments on the other hand have to grapple with “more important” issues like poverty, natural and man-made disasters, provision of education and health, and development of physical infrastructure.
The congress found that one of the biggest challenges for the industry is how to package and promote intellectual property initiatives for presentation to financiers. Intellectual property rights may be difficult to quantify because it is not a tangible item.
According to economist William Kizito, administrative structures are also lacking in most creative groups, particularly theatre companies in Uganda. The so-called leader in most cases handles almost everything, such as writing the script, recruiting artists, paying them and booking venues. “This kind of set up makes it difficult for bankers to come in. Bankers need clear administrative structures and not a one person operation. Bankers need to see control mechanisms. For example, they will need to follow the credit, turnover and banking history through the group’s bank account and not an individual’s account,” Kizito told the congress.
“Bankers also need long-term clear perspectives of a given creative production and not just one short film. In the longterm, bankers are able to recover their funds because they provide finance through credit cycles. They are not interested in short-term because inflation and market trends are always changing,” Kizito added.
Financial literacy is also vital for the industry because the borrower needs to have the minimum basics of finance in order to understand the requirements of borrowing and payments. The artists should also know what kind of products ae offered by banks, and if they cover the creative industry.
Sarah Nsigaye, an independent Ugandan filmmaker, believes that the financial sector in Uganda does not understand or have human resources and expertise to handle the creative industry. “If you approached a bank with a film production proposal, the management should be able to have the expertise to read through the script and see if it will get returns on investment. Of course, the bank will also look at your business plan, target audience and distribution,” she said.
“And banks should consider our productions and distribution network as security. For example, Uganda has over 2,000 video halls that are distribution points for films in the country,” Nsigaye said.
An independent regulatory body is also needed to promote professional ethics in the industry, the lack of which has created loopholes. Legal registration of the production company is also important besides having a physical address.
According to Wamala-Nnyanzi, artists need to operate in formal settings and pay taxes. He advises thus: “It is important to have a physical address, have up to date books of account, receipts, cashflows and audited accounts.
“We need government intervention to ensure that our products are bought as national policy to promote the industry,” Wamala-Nnyanzi argues. “The reason being that our products are inspired by Uganda’s cultural heritage, which will go along way to make Ugandans proud and as patriotism.”
“The government has to create a conducive environment through a lot of sensitisation. For example, by buying art products on a sustainable basis; then the banks would see the potential of the market. Hip-hop artistes have attracted financial sponsorship from various sectors because they are crowd pullers. The government can create the attention and other institutions will follow through by buying art to display in their areas of operation,” Wamala-Nnyanzi told The EastAfrican.
The issue of copyright is at the heart of every modern undertaking and in particular a wide range of economic activities are generally identified as “cultural industries.” Since 1986, the cultural industries have registered steady growth in Uganda — probably faster than the whole economy. A few indirect indicators show the recent development of the various sectors, sub-sectors and segments that are directly and indirectly related to the copyright industry. It is estimated that between 2004 and 2008, Uganda’s exports of cultural goods and services were valued at $20 million. In terms of employment, about 100,000 people countrywide are employed in economic activities that are dependent on copyright material. Museum and heritage contribute about 35 per cent; multimedia 15 per cent; visual arts 13 per cent; and the music industry 10 per cent, according to a mapping survey commissioned by the Uganda National Commission for Unesco in 2009. Local music VCDs and DVDs and local films dubbed Ugawood have over the years acquired a good standing in the cultural industry in Uganda.
According to independent Kenyan filmmaker Mburu Kimani, the River Road productions also known as Riverwood video industry exploited the lack of local content in the local broadcast industry. “They weren’t professionals in the broadcast industry. For the businessmen, it was not art but business.
“We the professionals were forced to go down there and work with the businessmen. The businessmen were churning out volumes targeting the masses. They cut costs and didn’t care about issues like packaging. A DVD goes for Ksh300 and to beat the pirates we market the latest products through FM radio and public service vehicles commuter taxis (matatus). By the time pirates come in, you have made your profits,” Kimani said.
“The government did not drive River Road. It started with very low quality productions and it is now improving because we have brought in the professionals who use better technology. We make films and sell them through this network. We tell simple Kenyan stories using local actors. Now banks are coming to us for possible financing because of our successful model,” Kimani added.
Kimani is however bitter that the Kenyan media industry does not buy their productions preferring to purchase from abroad under the pretext that River Road lacks quality. “We as independent filmmakers, are pushing for more local content because our target is the local market after all.” The Kenyan government has declared that 40 per cent of broadcast content must be locally produced.
The other options would be for the artists to use royalties as collateral or belong to savings and co-operative societies as a way of getting additional finance.
“Funding to artistes will contribute to the emerging global culture. Uganda has comparative advantage with the beautiful and much sort-after visual arts like batiks, mats, baskets and bark cloth items, but these are nowhere to be seen,” said Wamala-Nnyanzi.
Unfortunately, the current Ugandan government does not support the industry. “In the 1970s, commercial banks supported us by buying our works for displaying in the banking halls. When the National Resistance Movement (NRM) government came to power it set us back because promoting the arts was not part of its agenda.