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‘Creative Industries Can Drive Economic Growth, Job Creation’ – Report

South African Cultural Observatory (SACO) Chief Research Strategist Prof Jen Snowball’s recent paper with Serge Hasidi on cultural employment in South Africa explores the role of the Cultural and Creative Industries (CCIs) in facilitating job creation and economic growth in South Africa.

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The fast-paced change in the South African political and economic landscape – including the cabinet reshuffle and subsequent downgrading of South Africa’s sovereign credit rating to junk status – have left many questioning the economic future of the country. 

As a result now more than ever, the public and private sectors need to examine new and innovative ways to support and facilitate economic growth and employment in the country. 

The often underestimated ‘Creative and Cultural Industries’ (CCIs) may offer a route to just that job creation – and the perfect platform for innovative forms of economic growth. This is according to the South African Cultural Observatory’s (SACO) Cultural Employment Report, presented at the SACO National Conference (24 & 25 May), which shows that the CCIs could grow faster than non-cultural sectors of the economy. 

Globally, a recent CCI mapping study by EY found that 29.5 million people are employed in the CCIs worldwide, accounting for 1% of the world‘s active labour force and 3% of global GDP.

Related: 20 South African Side-Hustles You Can Start This Weekend

To gain insight into the economic potential of the CCIs in South Africa, the Cultural Observatory – the Department of Arts and Culture’s (DAC) cultural statistics research arm – recently conducted a study to examine the current state of cultural employment in the country.

Using international trends and UNESCO’s Framework for Cultural Statistics as a guideline, we established a framework from which to analyse existing data on the cultural economy.

We defined cultural occupations to include people employed as traditional cultural workers, such as writers, sculptors, and performing artists, as well as those employed in the more commercial creative industries, including, fashion, architecture, and graphic design. 

The study, which used Statistics South Africa’s (StatsSA) Labour Force Dynamics Survey which provides annual data from 2008 to 2014, found that the cultural and creative industries account for 2,93 % of employment in South Africa. 

This equates to 443 778 jobs, slightly more mining, which makes up 2.83% of employment in the country.

In addition to pinpointing current cultural employment statistics, the study found that employment in 2014 grew at a faster rate in the CCIs than in non-cultural sectors of the economy. This, we believe, has significant strategic implications for the future of South Africa’s economy and related employment opportunities. 

The Stats SA’s data set was also used to determine who the people occupying these creative roles are and how their employment experiences compare to employment in non-cultural sectors.

In terms of demographics, those employed in cultural jobs in 2014 were mostly black Africans (69.9%), Coloured (11.9%), Indian/Asian (2.2%) or white (19%), compared to non-cultural jobs, which were 88.6% black African, coloured and Indian/Asian and 11.4% white. However, the CCI job demographics were much more diverse in some domains than in others. 

Related: Latest Survey Reveals When South Africans Are Most Productive

Slightly more men are employed in cultural occupations (51.7%) than women, and nearly 40% of these men are under the age of 35. In comparison, the majority of women working in cultural and creative industries are between 35 and 49 years of age. 

The study found that those working in South Africa’s cultural occupations tend to be better educated or skilled than those working in non-cultural sectors. This means that earnings in the CCIs are also considerably higher than in non-cultural occupations – despite the fact that informal, freelance based employment accounts for more jobs than formal employment in this sector.

These higher incomes point towards the growing potential of this sector to boost economic growth. 

The report also shows that, similarly to international contexts, creative workers in South Africa tend to cluster or group together in provinces that have larger cities.

As a result, the Western Cape and Gauteng – the county’s two wealthiest provinces – currently have the highest proportion of people employed in the cultural sector.

In short, the Cultural Employment Report indicates that cultural jobs make up a bigger proportion of jobs in the South African economy than one might have initially expected. 

This is especially interesting as jobs in primary industries such as mining decline, the services sector and tertiary industry jobs – which include many cultural jobs – are going to become essential contributors to job creation in the country.

The challenge however is the volatility of cultural jobs.

Cultural occupations can be unpredictable, and have a tendency to be sensitive to economic downturns. They also have a propensity to attract short-term contracts and long working hours – making them a stressful employment option.

If the recent credit rating downgrade leads to slower economic growth in the long term, it will no doubt affect all job creation possibilities, including those of the CCIs.

However, it is important to note that, as South African and international research has shown, people working in the CCIs are good at having multiple jobs, and can adapt in tough times by diversifying their income streams – making them resilient and resourceful in times of economic strain – something we all need to learn as times get tougher. 

Also, if suggestions in the proposed Revised White Paper on Arts, Culture and Heritage, such as expanded economic rights and short-term unemployment insurance for cultural workers, are seriously considered, more people might be encouraged to consider the CCIs as a career option, leading to sector-wide – and arguably – national growth and employment.

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Top Sectors For SMEs In 2019

“As such, SMEs in the construction, communications and electrical fields are all likely to benefit from supply and sub-contracting agreements over the coming years.”

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While the South African economy has been underperforming for a number of years, the first positive signs of turnaround started to become visible by the second quarter of 2018, and by the end of the third quarter, data supplied by Statistics South Africa showed that the economy had indeed grown by 2.2 percent, compared to the previous quarter. This uptick is expected to have a positive effect on business confidence in 2019.

This is according to Jeremy Lang, regional general manager at Business Partners Limited (BUSINESS/PARTNERS), who says that certain business sectors have already seen an increase in opportunities for small businesses and start-ups.

“While these sectors will not be without challenges, the following four industries are likely to offer the best opportunities for small and medium enterprise (SME) owners to grow their enterprises in the coming year.”

Tourism

The World Travel and Tourism report 2018, revealed that the direct contribution of the travel and tourism sector to South Africa’s GDP has been projected to rise from R136bn in 2016 to R197.9bn by 2028 – set to make up a total of 3.3 percent of the country’s total GDP, says Lang.

“Although this sector experienced some setbacks in 2018, such as the drought in the Western Cape and stricter visa regulations for children entering the country, both the water restrictions and visa regulations  have been relaxed and the sector is once again poised for growth,” he says.

Related: Government Funding And Grants For Small Businesses

Manufacturing

Statistics South Africa has credited this industry with being the biggest driver of growth in the country’s GDP, having expanded by 7.5 percent in September 2018, says Lang. “To bolster this, Government has made a concerted effort to stimulate small business growth in this area with initiatives such as the Black Industrialist Programme and the SA Automotive Masterplan.”

He adds that businesses in the manufacturing sphere could therefore likely see significant opportunities in the form of outsourcing contracts and new partnerships with large corporates.

Agriculture

“The debate around land expropriation has occupied most of the discussions surrounding the agricultural sector in 2018, with some questioning growth prospects of this sector. However, this industry has a lot of growth ahead of it, as demonstrated by its 6.5 percent growth over the last three months of 2018,” explains Lang.

“Further to this, the industry is also already taking significant advantage of seven climatic regions in South Africa, with the export of a wide variety of high quality fruit and vegetables increasing substantially,” he points out. The recent outbreak of foot and mouth disease that has resulted in the suspension of the country’s FMD-free status will however significantly impact meat exporters.

In terms of opportunities for SMEs, he says that these may most likely be found in the rural and underdeveloped regions, where the need for resources like efficient transport, state-of-the-art cold storage, better irrigation and private power generation will be key to making agriculture projects more productive and competitive in the export market.

Data and information technology

Connectivity and information technology infrastructure are both crucial to business and employment growth in South Africa, says Lang.

“With many municipalities and the Western Cape government committing to providing all of its residents with free data as part of a plan to expand public Wi-Fi network access, it is clear that this is also becoming a high priority on a state level.” 

Related: 9 Ways To Elevate Your Small Business To The Next Level

It has also been reported that South Africa is awaiting the arrival of three international data centres, and large players in the communications sphere, including Vodacom, Telkom and Vumatel, are making huge strides in drastically growing the country’s fibre optic backbone, he adds. “As such, SMEs in the construction, communications and electrical fields are all likely to benefit from supply and sub-contracting agreements over the coming years.”

In conclusion, Lang says that as South Africa’s economic growth has started to turn around, business owners should keep their ears to the ground as 2019 is highly likely to be a year of opportunity.

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Herman Mashaba To Talk On City Of Jo’burg Job Creation Initiative

Herman Mashaba to talk on City of Jo’burg job creation initiative at 2019 Business Day TV SME Summit.

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Mayor of the City of Johannesburg, and one of South Africa’s most successful entrepreneurs, Herman Mashaba, will be one of the presenters at the 2019 Business Day TV SME Summit which will be taking place at The Empire Venue in Parktown on 7 March 2019.
Now in its third year, the Business Day TV SME Summit provides an opportunity for small business owners, entrepreneurs, incubators, franchisors, investors, as well as suppliers to the SME sector to come together and engage with experts in the business, technology, marketing and investment fields.
Having founded the now iconic hair-care brand, Black Like Me, more than thirty years ago during the apartheid era and on the back of a R30,000 loan from a friend, Mashaba’s experience in establishing an entrepreneurial enterprise holds great value for small and medium-sized business owners in South Africa. Mashaba will also be highlighting the City of Johannesburg’s innovative drive to stimulate inner city opportunities and job creation.
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Managing finances and obtaining funding and expansion capital are challenges many entrepreneurial businesses face as they look to grow their footprint in the market. Darren Segal, Personal and Business Banking Innovation executive at Standard Bank – one of the partners of the SME Summit – will present advice on negotiating funding and finance, to ensure effective cash flow management.
Complex tax issues will also be covered by a representative from the office of the Tax Ombudsman.
Taryn Westoby, Head of Tiso Blackstar Events which manages the SME Summit and curates the speaker line-up says: “We work alongside Business Day TV to meet the requirements of those engaged in the SME sector, so that the content of the Summit aligns to some of their most pressing concerns and needs. The line-up of speakers includes experts in the fields of business scaling, marketing strategy, intellectual property (IP) rights, and risk mitigation.”
As such, Graham Mitchell from GROW has been engaged to share insights into the leadership required to scale a winning management team.  Vishen Pillay, partner at Adams & Adams and an authority on copyright, patents, and trademarks, will provide guidance on protecting IP. Therusha Bhagarette of Credit Guarantee Insurance Corporation of Africa Ltd will expound further on the do’s and don’ts of risk management. The full line-up of expert speakers and topics will be published on www.smesummit.co.za.

International perspective

An international perspective to entrepreneurship will also be provided through Business Day TV’s The Big Small Business Show and a pre-recorded session with Uri Levine: renowned serial entrepreneur and founder of Waze.  Levine was recently in South Africa as a guest of Tiso Blackstar to deliver the keynote presentation at the prestigious Sunday Times Top 100 Companies Awards to an audience of CEOs from the top-performing companies on the JSE.

Leading organisations at the SME Summit

Once again, leading organisations have committed their participation at the Business Day TV SME Summit, recognising it as one of the most effective platforms for SMEs to engage professional insights and facilitate knowledge-sharing in support of much needed entrepreneurial development in SA.
This year’s headline partners are Credit Guarantee Insurance Corporation of Africa Limited, SAICA, and Standard Bank. Other partners include BDO, Adams & Adams, Liberty, Payfast, GROW, The Tax Ombudsman, W&R Seta, Telkom, Santam and The Little Green Number.
For sponsorship and exhibition opportunities:  Stephen Horszowski – stephen@tisoblackstar.co.za
Delegates who wish to purchase tickets for the full day event (07h00 – 15h00) at R995:  Lucy Johnson – johnsonl@tisoblackstar.co.za or visit  www.smesummit.co.za

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SME Insurance Checklist For New Year

Malesela Maupa, Head of Product and Insurer Relationships at FNB Insurance Brokers, advises SMEs to consider the following factors when reviewing their policies.

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Business owners who are planning for the year ahead should not overlook the importance of reviewing their insurance policies to ensure they are adequately covered against insurable risks.

Malesela Maupa, Head of Product and Insurer Relationships at FNB Insurance Brokers says, every year businesses face unique challenges ranging from credit and market risks, technological disruptions, compliance, operational and regulatory risks, amongst others. As a matter of precaution, insurance policies should at least be reviewed or updated once a year.

He advises SMEs to consider the following factors when reviewing their policies:

  • Employee movements – if there are any employees who have left or joined the company, ensure that your policy is updated accordingly.

This type of cover normally depends on the role and contribution of the employee to the business. For instance, directors may be covered for Key Person Insurance and Directors & Officers Liability insurance.

  • Protest Actions – this year is the national election year and leading up to elections we can expect to see an increase in the frequency and severity of protest actions, riots and strikes. Thus, it is essential to ensure that adequate special risks cover is in place from the South African Special Risks Insurance Association (SASRIA).

SASRIA provides cover to both individuals and businesses against special risks like civil commotion, public disorder, strikes, riots and terrorism at affordable premiums.

  • Cyber risks – it is essential to communicate with your insurer or broker and find out if there are any new risks that your business should be protected against. Cyber incidents continue to be a major risk for businesses especially in the SME sector. Over the last couple of years there has been a major increase in the number of reported cyber incidences.

Related: I would like to start an insurance business. What are the basic guidelines?

More businesses are now facing increased cyber threats due to their increased dependency on technology, relating to their internal and customer data being compromised by fraudsters. It is therefore essential to have some form of cyber risk insurance cover and/or enhancement of data security protocols.

  • Regulatory changes – every year there are a number of regulatory changes that impact businesses directly or indirectly, which may result in fines and penalties for non-compliance.
  • Natural catastrophes – the increase in the frequency and severity of extreme weather conditions, coupled with intensifying natural catastrophes will continue to have a significant impact on businesses.

Businesses should ensure they are adequately protected against these risks to avoid incurring sever financial losses.

  • Business changes – should a business consider moving to a new location, purchasing new premises or venture into new business activities, these types of changes could have a major impact on its risks profile. As a result, the policy needs to be updated accordingly.
  • New and Enhanced products – An innovative culture has taken over the insurance industry and ever so often we see the introduction of new products or the enhancement of existing products. Get in touch with you broker to advise you on any new products that might add value to your existing insurance portfolio.

“Reviewing your policy regularly gives you peace of mind knowing that you can focus on running your business effectively, without worrying about unforeseen risks,” concludes Maupa.

Related: Insurance For Small Businesses: What Should Be Covered?

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