In 2014, the South African Government launched Operation Phakisa for the Oceans Economy, a national initiative for fast-tracking development in the maritime sector. The initiative concentrated on six focus areas, namely, Aquaculture, Coastal and Marine Tourism, Marine Protection and Ocean Governance, Marine Transport and Manufacturing, Offshore Oil and Gas Exploration, and Small Harbour Development. Two cross-cutting focus areas were further identified, namely, Research, Technology and Innovation, and Skills Development and Capacity Building. With Operation Phakisa reaching the end of its first phase of implementation in 2019, additional strategies and plans are now needed to achieve sustainable long-term growth in the sector. 

This article examines the economic contribution of the Oceans Economy, and is the second in a three-part series intended to lay the foundation for a webinar to be hosted by the South African International Maritime Institute (SAIMI) aimed at examining strategies for the further growth of the Oceans Economy.

In 2013, as part of the preparations for the development of the sector, a team from Nelson Mandela University (NMU, then NMMU) developed a definition of the Oceans Economy for statistical purposes, together with a method for estimating the contribution of the Oceans Economy to South African Gross Domestic Product (GDP). The sector was defined as “the environment that sustains and facilitates a wide range of economic activities – not only shipping transport, recreation, and fishing but also government ones, like navigation aids and information, weather forecasting, defense, sea rescue, policing and customs, marine and coastal management and research and education, and also mining, farming (aquaculture), pharmacology, science and technology and energy generation”.  The definition was revised in 2017 to include “all economic activities closely linked to the oceans resources and/or dependent to some meaningful degree on the ocean”. Using the new definition, the Eastern Cape Strategic Roadmap for the Oceans Economy indicated that the total contribution of the country’s oceans economy sector is projected to rise to approximately R208 billion in 2038 from R128 billion in 2018, with the percentage contribution to the total economy rising from 4.5% to 4.8% in 2038.  In addition, the Roadmap estimated that the number of jobs, whether created directly, indirectly, or through induced effects, would rise from approximately 518 408 to 833 549.

The Roadmap’s calculations further indicated that Marine Transport and Manufacturing contributed the most to the Oceans Economy, at approximately R16.6 billion, with Transport contributing more than Manufacturing at R8.8 billion against R7.8 billion. The second highest contributor was tourism, at R11.7 billion, followed by marine-related construction at R10.8 billion. 

Notably, the Roadmap includes an “Other Ocean Economy” category of activities, and this was projected to reach the highest value among the Oceans Economy industries by 2038, rising from R4 billion in 2018 to R30 billion. This category includes indirect, induced and other factors considered to be both oceans economy sectors and subsectors which were not initially considered in sufficient detail under Operation Phakisa in 2014.  Marine Transport and Manufacturing is expected to remain second highest at R26 billion, with tourism, at a value of R17.5 billion, expected to fall to fourth behind marine-related construction at R17.8 billion. Renewable energy, projected to be the fifth highest contributor, appeared as a notably fast-riser, with a value of just R164 000 in 2018 predicted to increase to R15 billion by 2038.

The Oceans Economy is in addition a significant contributor to South African trade. According to the Maritime Doctrine of the South African Navy, 75% of the country’s trade by value, and 95% by volume, is carried by sea. Products of the Oceans Economy further contribute to the value of exports. Two notable categories are Fish, Crustaceans, Molluscs and Other Aquatic Invertebrates, and Ships, Boats and Floating Structures. Trade statistics of the Department of Trade, Industry and Competition (the dtic) indicate 2020 export values of R6.5 billion and 2.87 billion for these categories respectively. 

Both of these categories serve to illustrate the value of the investment that has been made towards the development of the Oceans Economy. In the case of the fishing industry, the Quarterly Labour Force Survey of Statistics South Africa (Stats SA) recorded employment of 11 195 people in the industry in the fourth quarter of 2014, the first year of Operation Phakisa. Of this number, 10 384 were employed in Ocean and Coastal fishing and just 811 in Hatcheries and Fish Farms. By Quarter 4 of 2020, the total employment had risen only moderately to 11 918, but Hatcheries and Fish Farms had absorbed 5 576 people, while employment in Coastal and Ocean Fishing had fallen to 6 342. The implication is that jobs necessarily lost due to the urgent need to rebuild depleted fish stocks have been at least partly offset by new jobs in aquaculture, and, while the number of jobs changes from quarter to quarter, some quarters reflect a net gain.

Within Marine Manufacturing, the Operation Phakisa focus area most closely aligned to exports of Ships, Boats and Floating Structures, boatbuilding has become a prominent activity, with a 2020 survey by the dtic finding that 79% of the leisure boat builders were orientated towards export markets. According to the department’s statistics, this industry segment achieved the feat of growing exports in the category Yachts and Vessels for Pleasure or Sports – notably high-value leisure products – in 2020, despite the Covid-19 Pandemic. The South African boatbuilding industry is well-organised, with its industry association, the South African Boat Builders Export Council (SABBEX), representing 68 builders, distributors and component suppliers.

It is important to note that the figures referred to above on the achievements of the sector relate to either current performance or projections based on existing trajectories. However, based on the country’s location, situated on a major trade route and surrounded mainly by ocean, it may be argued that higher performance should be possible. The fishing industry and vessel exports of other countries provide interesting comparisons, although several factors may play a role in performance differences. For fishing industry products, South Africa’s export value of approximately R6.5 billion may be compared with the Trademap data for the same category for Greenland, a country with approximately 56 000 people. Despite its far smaller population, Greenland’s exports were comparable with South Africa, at approximately R6 billion in 2020. Among countries which may be expected to deliver similar performance to South Africa, Argentina exported approximately R27 billion, New Zealand R17 billion, and Australia R14.3 billion. The United Kingdom, with a similar population to South Africa, exported R30 billion. 

If Marine Transport and Manufacturing is considered, the performance of South Africa may be compared with a noted maritime country such as the Netherlands, with little more than a quarter of the population size, which exported R76 billion in Ships, Boats and Floating Structures in 2020. Similarly, Norway has approximately 5 million people to South Africa’s 60 million, but recorded exports of R13 billion in the same category. Among countries that may be considered “developing”, Singapore may be presented as an example. The country has a population size comparable to the Western Cape but a land area smaller than the City of Cape Town, yet exported R11.8 billion in vessels and floating structures in 2019. The figure fell to 2.8 billion in 2020, but this may be considered a deviation from the normal trend in view of the R8.5 billion in exports recorded by the country in 2018.

While local circumstances, history and priorities complicate comparisons with the abovementioned countries, their performance suggests that a sustained effort should result in South Africa achieving similar levels of performance. The webinar to be presented by SAIMI will seek to stimulate discussion on the means by which such improvements can be achieved.