When I was compiling South Africa’s entry into Variety’s Global Shooting Guide, I was surprised by the strong reactions from producers to my inclusion of the Industrial Development Corporation (IDC) as a key part of the local funding landscape.

For example, one of the producers wrote to say, “Before giving people false hope, please look at the statistics of the amount of films that applied and who actually received funding. The IDC caused two films to collapse as they could not get their ducks in a row to have their agreements signed before production started – Resident Evil and Heaven and Earth. They only funded one or two films in the past year or two.”

This followed mixed responses about the IDC from producers for an earlier Variety story on financing in South Africa. One producer wrote, “The high interest rate makes affordable financing difficult. The IDC has been a disappointment; their deals are expensive and unrealistic. Certain protocols within the IDC are fairly bureaucratic, and this can cause delays in the financial close, so some streamlining would be beneficial.” There were also complaints about late payment.

Knowing that the South African film industry has already scared off one funder in Rand Merchant Bank, I approached Basil Ford, head of the IDC Media & Motion Pictures Business Unit, for comment. According to Basil, the IDC received around 15 applications in the last financial year, of which it funded eight at a total cost of R111 million. Since the beginning of its involvement with the film industry, the IDC has invested roughly R600 million, from as little as R1.5 million to as high as R70 million.

Basil is in the unenviable position of being caught between an organisation that is perceived to be bureaucratic and an impatient film industry that lives in the urgent. “We have very clearly defined processes within the IDC in order to ensure good corporate governance, so we have to make sure that all the required information is received before approval of funding. The IDC Act stipulates very clearly that economic viability has to be determined before any investment can be made. Producers often develop projects for three to four years, then expect us to conclude a deal in a month or two months. The IDC would greatly appreciate it if producers could allow enough time in their planning to enable the IDC to go through its processes. Also, if they could engage with the IDC prior to submission of the application, in order to submit as complete a set of documents as possible. Producers must also allow adequate time for the often complex legal processes to take place,” Basil says.

“Legal agreements can take two to three months, especially when overseas lawyers are involved.” He says that the IDC generally takes four to eight weeks, depending on the complexity of the project, to evaluate a proposal and to decide whether to take it further. “Producers often come with missing documentation, so we have to go back to them and quite often it takes a long time to get all the right documentation, which delays our approval process.”As an example, he cites the producers of Heaven and Earth, who came to the IDC after the production had already collapsed and wanted funding to be provided the next day. “They also couldn’t give us much of the information we requested, so it was really difficult and it was just something that we couldn’t be involved in from a timing perspective.” On Resident Evil, he says, “We have absolutely no knowledge of Resident Evil having applied for IDC funding.” Basil is aware of the perception that the IDC is expensive. “The reality is that we charge according to the South African prime rate, usually prime plus one or prime plus two, depending on the risk and development impact. Unfortunately, if you compare our prime to the UK or the US, they’re much cheaper than us. At one stage, the US prime was 3,25% and Canada was 2,25%, so you could go and get prime plus 8% in the US or Canada and it would still be cheaper than us.”

He believes it’s extremely positive that the Department of Trade and Industry (dti) is now paying out their rebate according to milestones. “There is an option, so producers can either allow the dti to cash-flow the rebate or do it the old way, but I don’t see that there’s a need for us to cash-flow the rebate anymore.”

In contrast, Basil says the IDC’s equity price “is on par with the rest of the world.” He explains, “If we talk equity, of course it’s expensive, but we just co-funded with an American partner who was 25-30% more expensive than we were. If you compare apples with apples, we’re no more expensive.”

Historically, it’s been difficult for small budget films to access IDC funding, as they are generally unable to obtain a sales projection from a reputable sales agent or get completion bonding, which are both required by the IDC.

Basil explains, “To help assess the commercial viability of a project, we work with sales agents, who have an idea of what a film can do in the current market. Similarly, we don’t want to manage the production of a film, but we have to mitigate the completion risk, so having a bonder gives us a lot of confidence that a film will be completed.”

He acknowledges that low budget local films struggle to find international sales agents, but says he’d be happy to accept Nu Metro or Ster Kinekor projections for the local market. Similarly, he admits that “a bonder usually costs more money than a small film can afford.”

Again, he’s hopeful that the revised dti incentive, which subsidises completion bonds, will make it easier for low budget films to access IDC funding.

“I’m confident that as we go along, things will get better. We’re also developing templates to assist all applicants and make it easier for people who haven’t engaged with us before, which will speed things up. Some who have criticised us have never dealt with us, which means they don’t understand the process. The most important thing is we need to work together and all go in the same direction, which will ultimately lead to a self-sustainable South African film industry.”

Let the IDC know what you think by leave your comments below.
Kevin Kriedemann