Subsidies for wealthy movie studios won’t help Kenyan film

Saturday March 5 2016

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A couple of weeks ago, I watched an interesting talk show which featured Oliver Litondo, a Kenyan actor who has had a distinguished career.

I was impressed by the breadth of his knowledge on the vagaries of filmmaking and performance arts.

In the week before the interview, an announcement came out that the tragic story of the Westgate terror attack would be told in the form of a movie, but that the filming would take place in South Africa.

In the eyes of Kenyan artistes and patriots, this was a cultural loss because non-Kenyans would be telling and benefitting from a Kenyan story. I think that it’s absurd to believe that human stories should have nationality and should only be rendered for broad consumption by pre-approved people.

Intertwined with the angst of an authentic story showing Kenya’s weaknesses and strengths over five short days is the fact that failing to host the Westgate movie in Kenya was an economic loss.

The argument has several angles. The first one is that a movie hosted in Kenya would be free marketing for Kenya’s tourism.

The idea, while plausible, does not make clear whether a movie based on the massacre of innocent shoppers, showing the incompetence of security officers across the ranks, together with an impish bureaucracy, would be the perfect marketing tool.

Not unless the logic was that a banker or winemaker sitting in Edinburgh or Ebro River Valley respectively should come to Kenya to pity its citizens for the woeful performance of a “digital” government when things mattered most.

The most direct economic argument made was that Kenya has lost its competitive edge as a destination for movies because of the government’s reluctance to provide tax incentives.

Competing African destinations, such as South Africa and Morocco, feature in big-budget movies, the argument goes, because their specific fiscal policy allows for deductions on equipment and other subsidies that make movie production cheaper.

This argument, while neat and eloquently stated, is backed by poor economic reasoning.


Reducing taxes on a specific industry or activity is bad policy. There’s no guarantee reducing taxes deeply to attract movies from Morocco or South Africa would work.

These two destinations could easily reduce their taxes further and start a race to the bottom in tax reduction, with all benefits of subsidies flowing to the movie makers and the few superstars that they employ.

This effort to attract movies by all means, through ever lower taxes, is a contest to see who can waste the most public funds, and it’s a good thing the government of Kenya has refused to play this game.

A good policy would aim for a tax regime that reduces costs for all industries and avoids distortion by favouring the movie industry. Employing the blunt economic instrument of subsidies on filmmakers is bad policy because every subsidy represents a transfer of money from one group of people to another.

Poorer Kenyans would be contributing subsidies to studios that are able to put in millions of dollars for a single production. That is not justice, and if the price for that is that no movie production takes place in Kenya, then the government is right to let it be.


Interested parties in the industry insist that filmmaking has the potential to create many jobs. A repository of movie data by Stephen Follows confirms that the largest film employed less than 3,500 people through both shooting and post-filming production.

Indeed, a majority of the employees worked behind the scenes in the technical part that edits and refines the final product.

The same data source shows that half of all films produced in the United States displayed credits for less than 500 people. This confirms that the high-end movies we hope to attract are capital-intensive as opposed to labour-intensive enterprises. Subsidies would simply flow to the movie house without percolating locally.

So, the local film movement may advocate local production but the effect of their proposal is the equivalent of government sending a cheque to a rich movie studio outside the country.

In short, Kenyans must appreciate the capabilities of Kenyan artistes who manage to work their craft in as competitive an industry as movie making, but that appreciation shouldn’t require government to throw public money at fancy projects in the quest to turn Kenya into a moviemaker’s paradise.

Kwame Owino is the chief executive officer of the Institute of Economic Affairs (IEA-Kenya), a public policy think tank based in Nairobi. Twitter: @IEAKwame