The maritime economy has immense potential to rev up the economy and stimulate job creation

When the Dutch East Indian Company was mandated to map a route to India around the tip of Africa some 400 years ago, nobody would have anticipated the latent future economic potential that South Africa’s 2 800 kilometre coastline, which straddles three oceans – the Indian Ocean to the east, the southern ocean to the […]

When the Dutch East Indian Company was mandated to map a route to India around the tip of Africa some 400 years ago, nobody would have anticipated the latent future economic potential that South Africa’s 2 800 kilometre coastline, which straddles three oceans – the Indian Ocean to the east, the southern ocean to the south and the Atlantic to the west, held for the country.

The southern tip of Africa is no longer a stop-over for spice merchants, but the vast coastline now supports many communities in the vicinity and beyond and is a hub for a thriving ocean economy.

According to the findings of a study conducted by the Nelson Mandela Metropolitan University, the oceans around the country have the potential to contribute R54 billion to the GDP and an estimated potential to create 316 000 jobs. At the launch of Operation Phakisa in 2015, marine transport and manufacturing were estimated to contribute nearly R25 billion to the GDP by 2020, and an excess of 15 000 direct and 45 000 indirect jobs within the same timeframe.

Government concedes that despite the enormous contribution that the ocean economy makes to the country’s GDP and the role it plays in generating much-needed jobs, the country has an opportunity to ramp up its contribution to economic growth by leveraging its rich marine resources in a sustainable manner to boost both economic and social development.

According to figures released by government, the ocean economy has the potential to contribute up to R177 billion to GDP and create just over one million jobs by 2033, increase the number of jobs to 0,8–1,0 million, which is more than double the 2010 level. This will go a long way towards making a dent on the stubbornly high unemployment figures, which soared to 29% in the first quarter of this year according Statistics SA.

As part of Operation Phakisa, a project that was spearheaded by the Department of Environmental Affairs in partnership with various other departments, the future potential of the ocean economy is highly concentrated within four new growth areas. These sectors were identified as marine transport and manufacturing activities, (coastal shipping, trans-shipment, boat building, repair and refurbishment, etc.), offshore oil and gas exploration, aquaculture, and marine protection services and ocean governance.

The impact of the ocean economy in stimulating economic growth
South Africa is a maritime country which accounts for 3.5% of world sea trade and where 80% of trade value being driven by the sea, according to the South African Maritime Safety Authority. South Africa is in the top 15 countries that conducts trade on sea by distance.

According to a 2018 PwC report on Strengthening Africa’s gateway to trade and trade in southern Africa, trade in the region is dominated by South African ports, which make up 76% of containerized traffic in sub-Saharan Africa. The reports shows that Durban is the largest container port in the region by far, accounting for almost half of all containers moving through the region’s ports. It noted that in terms of factual freight handled, 10 ports in sub-Saharan Africa handle more than 500 000 twenty-foot equivalent units (TEUs) per year, and two of these handle more than a million per year; and only Durban handles more than two million TEUs per year. In addition, the report shows that four of the eight largest bulk ports are located in South Africa, of which two, Saldanha and Richards Bay are specialist ports handling iron ore and coal respectively.

South Africa’s oceans economy also presents an opportunity to stimulate growth in the management of shipyards, dry docks, marine repair shops and similar enterprises. These are the competency gaps that Operation Phakisa seeks to plug. South Africa cannot afford the luxury of neglecting an industry that has enormous potential to put the economy on a new growth trajectory.

Eco-tourism
The maritime economy can also give impetus to eco-tourism. South Africa is blessed with a flora and fauna biodiversity that is found nowhere else in the world, which draws flocks of eco-tourists to the country’s shores.

South Africa’s expansive coast with its sandy beaches, coupled with a variety of ecotourism activities – from snorkeling, whale watching, surfing, game fishing to scuba diving, and shark diving, make South Africa the ideal travel destination and help to position the country  as a preferred tourist destination.

Oil and gas
In the area of fossil fuels, the South Africa’s government has identified offshore oil and gas as a focus area for rapid development. The government has stated that it aims to accelerate the drilling of 30 wells in the next few years as part of Operation Phakisa, and develop infrastructure, such as a phased gas pipeline network

The discovery of rich sources of natural gas off the southern coast of the Cape bodes well for the development of the gas economy. It has been estimated that South Africa could be home to around one billion barrels of the globe’s total resources of gas and condensate. This was echoed by Mineral Resources Minister Gwede Mantashe, who hailed the discovery of gas deposits in February this year as potentially a major boost for the sluggish economy, which grew less than 1% in the first quarter of 2019

The maritime economy holds immense potential to stimulate economic growth, create employment opportunities and create a thriving ecosystem where entrepreneurs can be incubated and grow.

More opportunities
Operation Phakisa has also identified small harbors as low hanging fruits that can stimulate economic growth and accelerate enterprise development. These commercial activities:

  • infrastructure to support fishers: processing, ice production, cold storage;
  • infrastructure for boat-building and repair;
  • additional berthing and launching facilities;
  • new recreational fishing points; and
  • access to better amenities for fishers.

Operation Phakisa also identified ice-making, desalination, yacht mole facilities, water taxis and a variety of tourism ventures as other business opportunities that might work at a small harbour.

Looking ahead
The expansive oceans surrounding South Africa have tremendous potential to spur much-needed economic growth. However, all role players need to be cognisant of the delicate ecosystem and ensure that all economic activities are undertaken in a sustainable and responsible manner.

By Damian Bellairs, Servest Marine.

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