The financial situation of the Advertising Standards Authority of South Africa (ASA) is in a “perilous” state. Unless it receives funding in the next few weeks, it will cease operating within the next 45 days.
In a letter, seen by The Media Online, the ASA’s CEO, Thembi Msibi, and its chairman, Nkwenke Nkomo, told the CEO of the Association for Communication and Advertising (ACA), Odette van der Haar, that the ASA’s “board has to contend with a scenario where it may have to liquidate the ASA”.
“Given the facts that the NAB has only agreed a 6% increase in funding in 2015 over 2014 and the PMDSA has effectively withdrawn as a core member and therefore abdicated its commitment to help fund the ASA (see their letters dated 04 December 2014 and 20 January 2015), and MAMCA’s decision to only make available to the ASA the sum of R1.4 million from the reserves, the Authority will have to cease operating within the next 45 days,” the letter says.
“The board held an emergency board meeting on Thursday, 29 January 2015 and the board members were unanimous in their decision to attempt one last time to quickly negotiate a stable, appropriate and long-term funding scenario, or, failing this, to consult with government and legal and financial experts to bring operations to a halt and wind down the organisation with as little pain for staff as possible,” it reads.
Msibi and Nkomo said they had decided to come clean about the “operational situation” because of what they call a fundamental and underlying problem, that “a professional, self-regulation body, with the mandate and responsibility of the ASA, cannot function on the operating capital currently provided by our funders”. They said the situation wasn’t “conjecture, but a carefully considered analysis combined with years of empirical evidence”. They want to engage with stakeholders and members in an effort to resolve the situation before it’s too late.
“The ASA has continued to hold a good faith expectation that the stakeholders will fund the organisation. However, this expectation has consistently been frustrated by unfounded doubt in the professionalism and intent of the ASA, unilateral funding delays which impact on cash flows and reversals of previous funding commitments,” Msibi and Nkomo said in the letter. “At its 2011 AGM, the ASA board tabled a proposal to spearhead a new funding method, which was accepted. Subsequently, MASA initiated an industry wide funding Indaba with the sole aim of ensuring sustainability of the ASA and SAARF. The ASA process was subjugated to the MASA process. Several consultative sessions were held, but as yet no formal report has been provided to the ASA.”
They said the solution no longer lies in trying to further strip out operational costs but “rather in the inescapable fact that an organisation with the ASA’s mandate and the collective expectations of government, the private sector and the South African consumer, requires a level of funding beyond the apparent willingness of the current funders to provide”, they said..
Msibi and Nkomo outlined the reasons why proper funding is needed, not least to ensure the organisation remains independent and that it can fight legal challenges by large companies with deep pockets. They warned government could step in to “legislate and adjudicate on commercial speech, especially to protect the consumer from unscrupulous advertisers…”.
The ACA’s Van der Haar, in an email to members, said “The funding of the ASA is of grave concern to the ACA and we implore you to bring to the attention of your clients the attached correspondence, the funding issue of the ASA and the risks associated to the broader industry should the ASA cease to exist. We cannot afford to have the ASA and its role in the industry jeopardised as a result of a lack of funding”.
The ASA was set up in 1968 as the advertising and communications industry’s accredited instrument of self regulation.
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