By: Timothy Owase

 The entertainment industry, particularly Film and Music, are currently the fastest growing in the world at a rate of about 14% per annum. Most countries are therefore presently focusing their investment in this lucrative industry. Countries where there is great mineral wealth, focus is mainly on the film industry due to its potential to contribute to foreign exchange earnings and creation of employment.

The film industry in Kenya has a very promising future. This is particularly so because of the country’s great scenic physical and environmental features, which makes it an ideal location for film-making. This explains why the film industry in Kenya has been identified as a key growth industry with great potential to spur economic growth through employment creation and investment. It also serves as a useful tool for tapping the artistic energies of creative Kenyans.

The current status of the film industry in Kenya indicates a nation possessing big comparative advantages in terms of the country’s unmatched filming locations and an abundance of professional filmmakers and artists. In addition, the country has a wealth of production services that can be sold to the local and international business community competitively.

The film Industry in Kenya has for long been identified as a key growth industry with great potential to spur economic growth. It is aimed to help in the realization of vision 2030 through tourist attraction, investment, cohesion and integration and employment creation. Currently the film industry is generating revenue and creating wealth through Film, documentaries and advertising commercials.

It is a national moral imperative to create platforms for ordinary Kenyans to be able to bear influence in the expression of their own stories. In this way, we, as an industry, can contribute to the advancement of our democratic ideals and create prosperity. This statement is fundamental to all players to accelerate the pace of economic growth and job creation within the cultural industries through film and to extend the scope of development and empowerment as outlined in the Kenya government’s vision 2030.

 Key priority areas

• To increase foreign and local direct investment into film production through encouragement of private public partnerships.

• To invest directly in infrastructure and facilitate industrial capital formation required to exhibit Kenyan film products.
• To improve access to a viable film industry in terms of ownership and consumption.

• To establish a regulatory and legal framework for the industry, that will provide the necessary certainty and stability required by the investor community.

The Kenya government does acknowledge that film is more than just an economic activity. It recognizes the social, ideological and cultural aspects film and the affirmation of a people’s culture. Film is an integral part of the overall social, cultural and economic development and therefore prosperity for this country.

It should be acknowledged, that film and television are key in asserting and projecting cultural presence and identity of a country.  Local productions tell stories in the language and idiom of a country and define places, people’s rich cultures and impact powerfully on people’s sense of belonging.

The key to the development of the film industry in Kenya is hinged on effective skills development, increased access to film theaters, nurturing prospects for people from disadvantaged communities and an open medium of film distribution.

Traditionally such opportunities have been concentrated in the urban centers. Even then, distribution outlets have traditionally not been keen on the locally produced films. But with the emergence of digital broadcasting and the shifting demands by audiences, broadcasters are buying into the idea as well as their willingness to support the industry; thus making the future very bright to the local film maker.

In Kenya, cultural industries and in particular film are not sufficiently exploited to their full commercial potential. Their contributions to local job creation and foreign exchange earnings are seen as being limited. Whilst recognized for the economic and commercial value it creates and the economic impact it has, it has not had the support required to achieve necessary societal impact. More often, this sector is to some extent neglected or not acknowledged as being a part of the manufacturing industry in the economy. Thus, the need to move away from the traditional view that film production should only be seen as a hobby rather than a profit making venture. This is quite contrary to other developed nations where the sector contributes a significant proportion of the gross national product. The film practitioners regard their profession as a business, and even feel threatened that being commercial may interfere with their artistic integrity.

Film industry has its future being an exporter of products to the rest world. There exist various opportunities that need to be explored so as to create a culture of sustainable resources management for the film industry to flourish.

For Kenyan films to flourish, it has to appeal first to audiences at home before we can hope to break into foreign markets, at the same time proper facilities have to be created. It is should be the intention of government to see a thriving film industry. A focus on facilitating investment and funding into film will be the true engine for job creation.

Government’s role is therefore going create an enabling environment that supports the development of a vibrant market for film, stimulate the emergence of locally based small business enterprises, and creation and support for distribution channels.  This will bring the markets closer to the community and communities being brought into the mainstream of the economy. The core to a true film industry ownership is film production tools, distribution and exhibition, copyright and other intellectual properties.

I encourage all players in the sector to embrace the emerging trends in technology as I strongly believe that innovations are likely to pose new opportunities and challenges to film industry value chain. Hence identify new avenues for distribution, emerging markets and ways in which to interact with the business environment.

The writer is a Chartered Marketer and a film industry professional and can be reached at timothy.owase@live.com

 

The communication and information Act 2013 brought by it a raft of measures in the communication industry. Late 2014, the Communications Authority of Kenya released targets for broadcasters to meet set terms threshold levels of local content.  As set on yearly basis, 40% by June 2015, 50% by June 2016 and 60% by June 2018.

Broadcasters have given foreign content priority over the years, and as a result suppressing the growth of talent and skills in the Kenyan market. The government has for long lost revenue caused by the imbalances in television content. Digital migration process having been concluded, the government envisions that local content will flood the industry with plans underway to direct TV broadcasters increase the transmission ratio of local content to 60 percent. To ensure compliance, the government has promised to have penalties applied to ensure local content is given priority by the companies which will in turn stabilize performance of the industry.

In view of the migration, what are the opportunities and challenges brought about in Kenya? It is real; the migration has taken place and with it, there is mixed expectations for the stakeholders. Government, content creators, broadcasters, distributors, consumers and others, present and hold the key to foster the growth of the sector. To begin with, it is a laudable step to have migrated within the set timelines, which is a milestone in itself. Above all, content holds the key in enabling a sound broadcasting industry. It is sound for every player to define their space in programming and define a niche for survival.

Content is now being defined on informed decisions and its envisioned play as a key factor to which the interest of audience and the market demands. Competition in this field is also expected to get tighter as more players enter the market. As a result, this will lead to improvement in the quality of services offered of which for a longtime have been wanting. In essence, television services providers that will be able to innovate and come up with better programming will carry the day and grow their viewership. Competition may also lead to price cuts especially on the pay television platforms. As a result, the customers will end up as key gainers as they will have options arising from multi-channels, hence much freedom to choose.

For the investors, the migration has made it easier and cheaper to put up their own stations, given that; it is now easier as compared to before. Prior to the migration, one would need to have to set up equipment or transmitters, especially if you wanted set up across the country. The migration has resulted to an optimal utilization of the transmission infrastructure with more channels which translates to the need for more content which would result in more jobs in the sector especially for actors and producers. It is now obvious that each station want to appeal to its audience in the best way possible. Sourcing for content is creating opportunities for the youth in the industry.

The country expects an increase in the number of players in broadcasting. What the coming on-air of more stations, translates to more opportunities for the industry, and in this instance independent content productions and a boom in the creative industry. These sectors have, over the years, received very little funding support and had very few options for the airing of local content, as the country had very few licensed broadcasters. However, there are other considerations to be made so that the country harnesses fully the ‘opening up of the airwaves’, and realizes professional, diverse and fully –fledged local content in Kenyan broadcasts.

Current broadcasting industry, very few independent productions are aired on Kenyan television, a reflection of the challenges shared. These include among other issues, the stringent commissioning conditions and editorial control and quality of productions, as set by the broadcasting entities. The challenges the industry may face in meeting its obligatory quota will definitely filter down to the new television broadcasting players. At this juncture what is required is diversity in television production to include a variation in content for documentaries, diversity in language use in sitcoms, diversity in socio economic and political issues in drama and even exploring reality TV that genuinely reflects Kenyan day to day experiences.

The digital migration process has brought with it the possibility for more channels for both radio and television, and this is because digital broadcast signals can be compressed and offer more channels for programming in the freed up spectrum that previously was only able to transmit a single analogue channel.

Timothy Owase a film industry practitioner, and a Marketing and Communications professional.

Call: 0722283967

Email: timothy.owase@live.com

 

By TIMOTHY OWASE

Governments all over the world use incentives to foster economic growth, create jobs and build infrastructure.In the film industry, they the offer production incentives inform of cash rebates, tax credits, and or back-end or up-front production project funding. Besides these, local governments also consider jurisdictional offers in sales, use, excise, hotel accommodation, receipts tax relief by way of waivers, credits, exemptions and deductions. Incentives are used to attract industries that are viewed as important to the country.

Film entertainment is amenable to incentives given that it is highly mobile, labour intensive and effective in promoting a country. In addition to the financial support provided through the new rebate incentives, a number of other measures are implemented as part of the broader sector development strategy. These include capacity development for emerging production companies, the development of writers and editors, enterprise development programme, the establishment of pilot programmes in different locations to address distribution infrastructure, local content and audience expansion among others.

The provision of the incentives encourages production companies to advance industry transformation through adherence to the requirements of broad-based economic empowerment. Moreover, incentives are structured in such a way that, they would provide necessary impetus to the growth of the Kenyan film and television production industries thus creating an environment conducive for producers to attract investment and develop stable output and sustainable production businesses.

• Cash Rebates

Refers to the sum of money paid to a qualifying production entity based on the amount of qualifying expenditures or jobs created in the location on the qualifying project. In most countries, they are administered by departments of trade and industry

• Tax Credits

This can be refundable or non-refundable, and transferable or non- transferable

1. Refundable Tax Credits – It operates the same way as production rebates, but usually administered by the local tax collecting authority, and claiming by filing a tax return. Sometimes banks or other lenders can monetize refundable tax credits so that the production company can get the money earlier.

2. Transferable Tax Credits – Is one that may be sold or assigned to a local taxpayer. The transfer is handled directly by the production company or indirectly through the use of brokers. The company does discount the credit from its face value to entice local taxpayers to purchase them. Its regulation differs from country to country. Some allow multiple transfers while others allow single credit to be divided among multiple transferals.

3. Non – Refundable, Non – Transferable Tax Credits – This can be used to offset a current tax liability of the production company. Excess are generally carried forward and used to reduce taxes in subsequent years. Each country sets forward the period of time within which the tax credit can be carried forward.

• Back – end or up – front funding

Refers to funds made available to qualifying productions from local taxpayers in exchange for advantageous tax treatment from the local jurisdiction.

How other countries have determined eligibility to film incentives

Each country defines the type of projects eligible for the incentive benefits. It is depended on a country’s legal and business structure. The scope is quite wide including film, TV, Video, Digital programming, Games, Advertisement commercials, Animation among others. Most countries consider exclusions i.e. adult programming, reality shows and others as determined by the jurisdiction. Also, a clear project plan and distribution deal has to be in place. Qualifying test project may also be considered based on minimum spend, days, locals employment, revenue base, goals in building film industry in a location. Others base on qualifying expenditure which defines goods and services that constitute expenditures for the purposes of computing the incentive benefit.  Some of the countries that have implemented incentives include the United Kingdom, New Zealand, South Africa, and Netherlands among others. As countries consider introduction of film incentives, they consider various factors that are not limited to the annual cap on the amount to be awarded, the time or period for consideration, annual funding caps, employment issues such as the cast and crew subject to tax in the country and actions for compliance, residency requirements to qualify, financial details and specific dates of operation.

The writer is a chartered marketer and film and media industry professional.

Email: timothy.owase@live.com

Phone: 0722283967