This report offers an early assessment of the impact of the Covid-19 shutdown on the South African creative economy. Data, and the impact scenarios based on the data, was collected very early on in the shutdown (April 2020).
Near the start of the lockdown, the South African Cultural Observatory (SACO) ran an online survey to find out what impact the measures to manage the COVID-19 virus were having on businesses and freelancers in the Cultural and Creative Industries (CCIs), the adaptation strategies that the sector was using, and the most useful kinds of support that could be provided. The survey ran from the 30th of March to the 4th of May 2020, and thus provides an early assessment of the impact of the shutdown on the sector. 595 useable responses from all parts of the sector, which includes performing arts, heritage, publishing, music, film and video, design, and support activities were received.
38% of responses were from firms with employees, and the other 62% were from individual freelancers. 65% are operating formal (registered) businesses (35% informal, or unregistered), and 82% have a yearly turnover of less than R5 million (micro-enterprises). 69% of respondents said that their mode of production was mostly via live, face-to-face activities.
Almost all (95%) of respondents had experienced cancellation or indefinite postponement of work scheduled between the start of the survey and the end of the year; most cancellations occurring in April and May. The ability of the sector to continue with their normal business activities is low: Overall, 45% of respondents could not continue with any of their normal business activities during the lockdown, and a further 25% could continue with only a small part of the normal business activities.
At this early stage of the lockdown, 21% of employers reported that they were continuing to pay all their employees their normal salaries, and only 7% of employers reported retrenching permanent employees. However, 29% said that they were ending the employment of short-term employees (people working on short-term contracts, or informally), and a further 25.5% reported reducing the salaries of employees during the shutdown.
The CCIs are particularly vulnerable to economic downturns because many people who work in the sector are freelancers (individuals) working on short-term contracts. There is also a high degree of informality, as well as face-to-face production modes. The hardest-hit parts of the sector (in terms of their lack of ability to continue with some part of their business activities, as well as their inability to adapt) are the most vulnerable (freelancers, informal sector and face-to-face mode operators). Unfortunately, these are also the groups who were least informed about the kinds of government support available, and who qualified for them least often.
Analysis by domain showed that Performance and Celebration is most vulnerable (because of the high proportion of freelance and face-to-face production), followed by Audio-Visual and Interactive Media (who distribute their work remotely, but whose production depends on face-to-face interaction). Visual Arts and Crafts were rated third most vulnerable, despite their relatively low face-to-face production mode, but this was offset by their having the highest proportion of freelancers, as well as a high proportion of informal operators.
The second part of the report used the information from the survey to develop realistic scenarios that were used to shock an econometric model (based on a Social Accounting Matrix) to determine the economic impact of the Covid-19 lockdown on the CCIs, and their resulting impact (including the direct and indirect effects) on the South African economy as a whole. The report provides the first scientifically rigorous impact evaluation of the reduction in CCI activity because of the Covid-19 shutdown on the South African economy.
Results show that the impact of the Covid-19 shutdown is not symmetric and each of the CCI domains experiences different consequences and expected recovery times. The total impact (without the induced impact) on total output of the Covid-19 shutdown on the CCIs is -R53,3 billion and their consequentially direct and indirect impact on the whole economy is expected to be -R99,7 billion in 2020.
