South Africa is currently exploring ways to extract greater economic value from the so-called ‘oceans economy’ as part of the broader ‘Operation Phakisa’, which is being initiated in an effort to find ways to kick-start sluggish gross domestic product (GDP) growth and accelerate job creation.

President Jacob Zuma, who unveiled the oceans economy component of Operation Phakisa in Durban in July, also linked the initiative directly to the implementation of the policies and programmes outlined in the National Development Plan (NDP).

“The NDP 2030 aims to eliminate poverty, inequality and unemployment. The plan enjoys overwhelming support in the country. We have now moved to the point of implemen- tation,” he said, adding that the first imple- mentation of Operation Phakisa focused on unlocking the economic potential of South Africa’s oceans.

Teams of experts have started preparations for the oceans plan, which is expected to be formally launched before the end of the year.

“[Government] chose the oceans economy because South Africa is uniquely bordered by the ocean on the east, south and west,” Zuma noted, adding that, with the inclusion of the Prince Edward and Marion islands in the southern Indian Ocean, the coastline now spans 3 924 km.

But this vast ocean area is relatively unexplored in terms of its economic potential, with the oceans economy having contributed about R54-billion to South Africa’s GDP and created 316 000 jobs in 2010.

But government believes there is potential for the oceans economy to contribute to one- million direct jobs, assuming at least 4% of yearly growth in GDP contribution and job creation.

Priority Subsectors
Four priority subsectors have been identified as new growth areas in South Africa’s oceans economy to derive value that could contribute R177-billion to the country’s GDP.

These include marine transport and manufacturing activities, such as coastal shipping, transshipment, shipbuilding, repair and refurbishment; offshore oil and gas exploration; aquaculture; and marine protection services and ocean governance.

Government is exploring maritime transport and manufacturing to secure the benefits of the growing volumes of cargo handling and sea and coastal shipping, and support transport activities such as storage and warehousing.

In addition, the country is keen to use its location and expertise to increase its share of the global marine manufacturing market, including shipbuilding and repair, rig repair and refurbishment or boat building.

In the offshore oil and gas area, the aspiration is to enhance the enabling environment for exploration of oil and gas wells, resulting in an increased number of exploration wells drilled, while increasing the value captured for South Africa. Much will hinge, though, on the outcome of deliberations on amendments to the Mineral and Petroleum Resources Development Act, with the current proposals regarded as a threat to further investment in the sector.

Aquaculture, meanwhile, is said to be an area that is seriously underdeveloped. Besides the economic and jobs potential, aquaculture could also offer an important contribution to bolstering food security. Despite its relatively small size, aquaculture in South Africa has shown strong growth of 6.5% a year.

The objective of marine protection services and governance was to balance economic opportunities while maintaining environmental integrity, and to develop an incremental and integrated approach to the planning, monitoring and execution of ocean governance and enforcement in the next few years.

Maritime Nation
Speaking at a recent Transport Forum on maritime challenges, Deputy Transport Minister Sindisiwe Chikunga said the mari- time sector could feature as a powerful part of South Africa’s transport heritage. But she acknowledged that its profile remained low, compared with the air, road and rail compo- nents of the transport sector.

“I believe that South Africa is a maritime nation that has all the facets needed to become a prominent roleplayer in the oceans economy markets. We welcome and appreciate the recent national drive through Operation Phakisa to initiate maritime economy capabilities that can rapidly transform the country’s economic landscape,” she said.

Chikunga explained that more than 90% of all international trade is carried by marine transport and more than 80% of South Africa’s bulk trade is moved on sea through South Africa’s ports.

The economic potential of the maritime industry is, therefore, being prioritised, with Chikunga stressing that South Africa needed to attract ships to its national register or continue paying R44-billion a year to foreign operators.

“We need to face the hard reality that there is a lack of homegrown commercial vessels.”

Only about 1 600 vessels, mostly fishing and harbour boats, are on South Africa’s national maritime register.

It was therefore essential that the country attracted commercial shipping vessels owned by local companies, she noted, adding that 300-million tons of cargo passed through South Africa’s nine ports – with 98% of the nation’s trade done by sea – but not one cargo-carrying vessel flew a South African flag.

There was a need to create a vibrant shipping industry and create the thousands of seafaring and related maritime jobs expected of a thriving maritime sector, Chikunga noted, adding that South Africa had the maritime infrastructure and scale in place to accomplish this.

Further, South Africa having its own ships would mitigate the impact on the industry having to rely on foreign vessels.

“South Africa must have its own fleet [and] we need to discuss how best to acquire [this],” she noted.

A new tax regime that discards taxes such as capital gains and dividends, was introduced in January to develop the country’s maritime sector.

Previous reports indicated that South Africa is the only country in the Brazil, Russia, India, China and South Africa economic grouping, known as Brics, that does not have its own ships.

The Department of Transport recommitted to accelerating the finalisation of the Maritime Transport Policy, which will revitalise the maritime industry and continue efforts to make it attractive to fly the national flag in this sector.

Market Share
University of Johannesburg international logistics professor Johan du Plessis says that, in analysing the effect of global maritime trends on South Africa, it becomes apparent that the country is not dealing with a singular market.

The maritime industry comprised four markets – freight, sales and purchase, shipbuilding and demolition – that are not only integrated but also required that they be dealt with simultaneously.

He adds that the international liner trade is increasing every year and if this trend continues, South Africa will have to invest heavily in its ports.

“About 70% of global maritime trade takes place in the northern hemisphere; however, we are seeing the development of new ‘silk roads’ as Brics countries start merging together, and South Africa is ideally placed between those countries,” he says.

Du Plessis notes that most raw materials come from the southern hemisphere, which leads to more midtier liner ships docking at South Africa’s ports.

Gateway Competition
Although South Africa’s ports have been the gateway to Africa for many years, Du Plessis says this is changing rapidly.

“South Africa must rethink how it plays into that space. We have modern ports, but we must take the future plans of these ports into consider- ation. New developments to our ports could add 7.2-million containers to the network; however, it will cost R100-billion to upgrade,” he says.

South African Maritime Safety Authority CEO Commander Tsietsi Mokhele says one strong incentive to build the sector lies in the fact that 60% of South Africa’s GDP is derived through trade.

“If 98% of the country’s cargo is seaborne, then the case has been made. It weakens your [economic] position if your [national] registry is devoid of ships,” he says.

He indicates that up to 800 000 jobs are linked to the maritime industry.

Chikunga pointed out that the South African government recognised the need for skills development. Establishing a domestic mari- time university, developed in collaboration with all stakeholders, was proposed.

In the interim, an agreement has been secured with several countries, including Poland, to source the required skills for the maritime industry when required.

“Maritime is the future,” Mokhele concludes.