JUNK STATUS – Different Futures, Different Opportunities? Panel Presentation, supported by a discussion note, facilitated by Business and Arts South Africa (NPC)
An exploration of arts funding opportunities in South Africa.
Given the recent conferral of junk status on South Africa, Business and Arts South Africa asks the question what does this mean for the cultural sector in real terms, as we move into the future? How does the status impact on the economy, the politics, and specifically the daily survival of cultural entrepreneurs and practitioners? What are different financial models and scenarios that the creative sector will be required to engage with? Scenario Planning is not a prediction but describes “possible pathways into a future” or futures. When we describe the ‘future’, to what end is the word a verb, or an action, as opposed to a noun, as suggested by Futurist Ari Wallach. As a verb, ‘futures’ becomes a proactive, actionable series of opportunities, for cultural practitioners to engage in.
JUNK STATUS OVERVIEW
Yacoob Abba Omar, Senior General Manager of Strategy and Communications at the Banking Association of South Africa, breaks down the economic and political results of the status amendment. This overview will consider timelines for impact, unexpected outcomes, comparative countries, and possibilities for being upgraded out of junk status. What could the cultural sector potentially offer of value to broader society, in this time? What is the immediate impact on perception and morale, and what might longer term and real outcomes be?
Luiz Coradazzi, Director of Arts at British Council São Paulo, Brazil, will consider the parallels between South Africa and Brazil, with an analysis of the Latin American context and how an over-connected world is affecting local cultural scenes. He will also give an overview of some of the public debates and initiatives currently taking place in Brazil to address the crisis.
“Futures are never given. They are created.”
OPEN THE CONVERSATION
How then could we (as a sector) consider positioning our sector in response to these futures? How could the cultural sector approach both public and private sector to ensure continued support for society?
Based on what we understand from the above, how will this impact directly on the creative sector? Taking guidance from the original Dinokeng Scenarios for 2020, which described three different scenarios for the country, we have chosen three potential funding scenarios and will look at them through the lens of our learning on junk status as an economic “driver”:
1. NO PUBLIC SECTOR FUNDING, ONLY PRIVATE SECTOR FUNDING
This potential future speaks to “Creative Entrepreneurs” and a context with a high tolerance for risk and scalable work. It is underscored by:
- Cultural entrepreneurs as cultural change agents and resourceful visionaries who organise cultural, financial, social and human capital, to generate revenue from a cultural activity. Their innovative solutions result in economically sustainable cultural enterprises that enhance livelihoods and create cultural value and wealth for both creative producers and consumers of cultural services and products. At the heart of cultural entrepreneurship are the cultural and creative industries.
- Venture capital, provided by investors to startup companies and small businesses that are believed to have long-term growth potential. For startups without access to capital markets, venture capital is an essential source of money. Risk is typically high for investors, but the downside for the startup is that these venture capitalists usually get a say in company decisions.
- Equity financing – raising capital through the sale of shares in an enterprise. This essentially refers to the sale of an ownership interest to raise funds for business purposes. Equity financing spans a wide range of activities in scale and scope, from a few thousand dollars raised by an entrepreneur from friends and family, to giant initial public offerings running into the billions by household names such as Google and Facebook. While the term is generally associated with financings by public companies listed on an exchange, it includes financings by private companies as well.
- Debt financing occurs when a firm raises money for working capital or capital expenditures by selling bonds, bills or notes to individuals and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise that the principal loan and interest on the debt will be repaid.
- For profit engagement and equitable partnerships between the private sector and the arts – a shared value approach. This is BASA’s core focus, and BASA’s mission is to secure the future development of the arts sector in South Africa and contribute to corporate success through Shared Value whereby business and the arts can engage and achieve mutual benefit. We believe the arts can be a progressive and valuable enabler for businesses, not only offering marketing opportunities and demonstrating support for broader communities, but also offering innovative opportunities for HR departments, enhancing value-creation capacity and boosting business performance and innovation.
- B-BBEE opportunities via socio-economic development, skills development, and enterprise and supplier development allow one to access financing opportunities from private sector companies who require B-BBEE points. The enterprise and supplier development (ESD) points have a higher score with the revised codes. Generally creative entrepreneurs have a much better chance of accessing these kinds of funding, as opposed to NPOs. These funds are rarely accessed in the creative and cultural sector.
2. COMBINATION OF PUBLIC SECTOR & PRIVATE SECTOR FUNDING
This speaks to two possible futures “Creative Survivors”, underscored by:
- Survivalist and sustainability thinking.
- Creation of work/employment opportunities (individually/collaboratively) and self-agency, as opposed to jobs in the traditional sense, which are longer term and rely on an employer.
- Mixture of funding sources where government and agency funds remain as they currently operate, and private sector funds come from corporate sponsorship through marketing or corporate social investment (CSI), based on King IV requirements.
And “Creative Partners”, underscored by:
- Shared value approach with private sector (as above)
- B-BBEE opportunities (as above)
- Catalyst grants, such as the DAC Debut Grant, which work differently from the usual grantmaking processes. Catalyst grants require recipients to use the grants awarded to them to move their projects or venture forward. These grants can, for example, be used to intervene where there are challenges in value chains processes in the creative and cultural sector, or where there may be market barriers that prohibit meaningful participation of certain individuals in the creative and cultural sector.
3. NO FUNDING
This potential future speaks to “Creative Communities”, underscored by:
- Hope economics, which understands hope as a function of aspirations, agency, and pathways, which can play a role in the realisation of positive effects from economic and other development.
- Minimal to no funding from government for the arts, as is the case in some other countries.
- Potential funding from international agencies.
- Scarcity learnings. Scarcity refers to the basic economic problem, the gap between limited – that is, scarce – resources and theoretically limitless wants. This situation requires people to make decisions about how to allocate resources efficiently, in order to satisfy basic needs and as many additional wants at possible.
- Asset Based Community and Citizen Led Development – a paradigm offering a powerful approach to community development that focuses effort on discovering and mobilising resources present in a community.
- Collaboration and sharing of resources, skills, etc. The power of collaboration, co-creation and other communal opportunities are raised here.
- Grit thinking, harnessing the power of hard work plus dedication, perseverance and persistence in the face of adversity, and passion for long term goals.
- Pro bono and in kind support from corporates, as opposed to monetary sponsorships and partnerships.
- Crowd funding – a means of raising capital (and a crowd) from a large number of people in order to realise exceptional ideas/projects/ventures.
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- JUNK STATUS – Different Futures, Different Opportunities? Panel Presentation, supported by a discussion note, facilitated by Business and Arts South Africa (NPC)