20 November 2018

Africa: Time to Fix the Leak in Africa's Royalty Bucket

According to the Confederation of International Societies of Authors and Composers (CISAC), Africa is an economic and cultural growth story for creators such authors, visual artists, songwriters, music composers and publishers.

However, the continent is notorious for its poor use and uptake of intellectual property as reflected in low collection of royalties and low registration of patents and trademarks.

The contradictions in the area of intellectual property, particularly in East Africa, were at the centre of the Second Mashariki Creative Economy Impact Investment Conference held at the British Council in Dar es Salaam, which also drew attendance from Kenya and Uganda.

According to the World Intellectual Property Organisation, intellectual property refers to creations of the mind such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.

Intellectual property is protected in law by, for example, patents, copyright and trademarks that enable people to earn recognition or financial benefit from what they invent or create.

At the Dar conference, held under the theme "Intellectual property as collateral for financing the creative economy in East Africa," it was consensus that for the region to realise the full commercial value of intellectual property, it must enact laws that recognise Intellectual property as collateral for financing while promoting the creative industry.

Also, the conference heard, the region must sensitise the public about the economic value of Intellectual property, encourage the registration of IP and monitor the management of collective management organisations in order to improve the collections of royalties and distribution.

Convened by Culture and Development East Africa (CDEA) in collaboration with the Copyright Society of Tanzania the conference was intended to kick-start the process of systematically addressing the conditions for stimulating growth and investment in the creative industry in East Africa.

Royalty collections

According to the 2018 CISAC Global Collections Report, reported royalty collections in Africa reached $85 million in 2017, mostly from music. But this still only represents less than one per cent of total global collections reported to CISAC.

South Africa, Morocco and Algeria represent the majority of collections at 50.5 per cent, 7.2 per cent and 26 per cent respectively of total collections.

"Much work remains to be done. In 2017, the CISAC survey revealed that less than 40 per cent of all radio stations in Africa were licensed to broadcast music," the 2018 report notes. In East Africa, Uganda led in collections.

According to Uganda Performing Rights Society chief executive James Wasula, the society collected licence fees of Ush506 million ($133,238) in 2016 and Ush545 million ($143,507) in 2017.

According to Copyright Society of Tanzania (Cosota), Tsh237 million ($103,209) was collected in 2015 while Tsh57 million ($24,822) was distributed among rights owners.

High litigation costs

The Music Publishers Association of Kenya, which has been in operation for less than a year and made collections in only two months due to court cases, raised just Ksh1.8 million ($18,047) and distributed Ksh1.2 million ($12,633), according to its operations manager, Samuel Onyango.

Uganda reported paying out Ush92 million ($24,225) in 2016 and Ush61 million ($16,062) last year.

"Our expenditure, though modest, appears to be high due to low collections. If government agencies played their regulatory role effectively, collections would high and our administration costs relatively low," Mr Wasula told The EastAfrican.

"The decline in royalty distribution was due to the high cost of litigation. The Uganda Registration Services Bureau declined to renew Copyright Inspectors' Certificates of Authority without assigning any reason. We had no option but to enforce our members' rights through litigation," Mr Wasula added.

He added that of the more than 250 radio stations in Uganda, only 20 pay royalties.

"The problem is that radio stations do not want to sign licensing agreements with CMOs for purposes of collecting royalties," Wasula laments.

However, CISAC regional director for Africa Samuel Sangwa in his paper Copyright in Africa: Overview, challenges, achievements, blames laws that were made during the era of the single public radio and single TV stations as a stumbling block to the growth of collections.

"Today, there are several radio and television stations. So these laws have to be revised to reflect the changing times. Licencing in this digital era is the way to go," he said.

When it comes to filed Intellectual property applications, Africa again trails the rest of the world. According to the World Intellectual Property Organisation 2016 IP Statistics Report, Africa accounted for only 0.6 per cent of the total Intellectual property applications filed internationally.

Lack of published data

The African Regional Intellectual Property Organisation (ARIPO) Annual Report 2017 shows the majority of applications were filed from the US at 33 per cent, followed by South Africa and Germany at eight per cent and six per cent respectively.

The ARIPO member states' filings were 2 per cent of the overall total patent applications lodged in 2017.

In East Africa, only Kenya has figures for trademark registrations. According to the Kenya Industrial Property Institute, the number of national trademark registrations declined from 2,111 marks in 2008 to 1,999 in 2009, then rose again in 2010 to 2,354 marks. No figures were available for 2015 through 2017.

National trademark registration figures are not published on the websites of the Uganda Registration Services Bureau and the Business Registrations and Licensing Agency in Tanzania.

In his presentation titled "IP and Industrialisation," the acting chief executive officer of the agency, Emmanuel Kakwezi, highlighted the informality among Intellectual property rights owners or proprietors as one of the challenges to making Intellectual property collateral in East Africa.

"They have no clear structures and corporate image."

He also notes that there is a lack of mass production to meet demand, not to mention innovative communication and electronics to add value.

"Intellectual property is not one of those historical assets that financiers see as an asset," Mr Kakwezi said.

He added that there is lack of policies and guidelines in various financing institutions.

Auditing process

According to Mr Kakwezi, there is lack of evaluation or the auditing process and all books of accounts. "Intellectual property is not one of the queries by auditors while other assets are required to be evaluated. This is mainly caused by lack of universally acceptable evaluation methods of Intellectual property assets. Ascertainment of actual Intellectual property value has remained a problem because Intellectual property is intangible."

He observes that the optional registration of Intellectual property assets has made Intellectual property as not one of valuable assets. He suggests that IPRs need awareness to create importance.

"There is fear of infringement that results from the risks and fear of preservation of the value of IP from a lack of strict border restrictions and strict internal checks," Mr Kakwezi added.

"We do not secure Intellectual property in Tanzania and East Africa in general. We do not put a value on Intellectual property from the creative industry to ensure financial institutions fund those employed in the sector based on royalties due to them," Tanzanian Intellectual property lawyer, Sunday Ndamugoba said.

Value addition

"We need IP hubs, research and development facilitates to support the creative industry. Government should sensitise people on the value of Intellectual property. In the end the creators will add value to their works and ensure more earnings, he added.

"Do we have structures and institutions for the securitisation of the creative industry? Do we have the numbers or projected sales? If you cannot measure or put value to intellectual property, how are you going to attract investment? Our society is at the stage where people will not pay for something they do not see," another Tanzanian Intellectual property lawyer, Dr Saudin Mwakaje argued.

Robert Mwampembwa, a member of the Tanzania Visual Arts Association said: "President John Magufuli has created a directorate to deal with the arts, which was never the case before. However, this directorate is yet to receive any budget allocation. You may have good policies and regulations, but they are let down because of poor implementation. Therefore, you need strategic plans to implement them."

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