South Africa’s maritime sector has the capability to substantially exceed its current 1.2% GDP contribution and in so doing, play a significant role in both the country’s economic recovery and its sustainable growth.
Yes, the global economic slowdown, shifting trade patterns, the worldwide Covid-19 pandemic, protracted local lockdown, and the recent protests and civil instability in KwaZulu-Natal and Gauteng have all taken their toll on South Africa’s fragile economic growth.
Our maritime sector has not been spared, with many of these global and local factors hitting the industry hard. Couple this with a mature maritime sector with limited current growth prospects, and the outlook appears even bleaker.
That is, if you accept these challenges at face value.
South Africa is in fact uniquely positioned to seek out and take advantage of a multitude of global maritime opportunities
We, like maritime giants Singapore, Australia and The Netherlands, are a maritime nation. We have a coastline of just under 3000 kilometres in length, serviced by eight ports on an influential trade route. We have inherent skills and expertise that can be leveraged in the global marketplace. And our sector comprises strong players that have over and over expressed a strong willingness to work together for the growth and development of the entire sector.
To all this we need to add one more necessary and strategic imperative – political support and purposeful government interventions.
It is no secret that in a mature economic sector like ours with minimal growth, companies only grow by taking business from one another. Innovation and maintaining employment and job creation are not possible in such a constricted environment. The only way to develop companies in the sector is through diversification. And the only way for companies to diversify and grow their earnings is through deliberate, visible and focused government interventionist policies and support. Our industry cannot do this by itself; political will is critical.
Increasingly, through Operation Phakisa’s focus on the oceans economy and with a new industry master planning process underway, that political will is starting to become more visible. However, increased collaboration – and to the extent that it is possible, partnership – with government is key if we are to truly realise the full potential of the positive-growth opportunities available to our sector.
Some of those opportunities include ensuring South Africa is positioned as a preferred African maritime partner for the BRICS and other emerging countries that are investing in the continent. South Africa could leverage its existing participative agreements with these countries to fully participate in their maritime logistics value chains; ports operations/concessions maritime agency services; vessel operations and support, especially offshore; specialist maritime services; and maritime manufacturing – to name just a few.
Having a developmental mindset, South Africa’s maritime players are critically aware of our need to support skills development, enterprise development and localisation to enhance the economic sectors in which we participate. This is a win-win for countries engaging in such intra-Africa cooperation.
Manufacturing is within itself a massive opportunity ripe with potential. Public-private partnerships could provide the capital needed to bolster South Africa’s shipbuilding capability, which offers significant downstream benefits. Subsidies, for example, would help create jobs, assets and investments, thus kick-starting this vital aspect of the oceans economy.
There are government departments with ageing shipping fleets that need to be replaced. Beyond our borders, other countries are looking for shipbuilders that offer quality products and competitive pricing. By South Africa maximising its political and economic relationships with other African countries and developing economies, we could capitalise on this opportunity.
Being a preferred and recognised shipbuilder to, and constructing vessels for, such partner countries, would mean sustained job creation and skills development for years to come. It’s not hard to see how manufacture alone addresses issues around sustainable employment creation, training and development; economic recovery and economic growth in one fell swoop.
A third opportunity exists in the development of broader industry skills. We have excellent core competencies within our sector, but these too are ageing. We must cultivate new skills, especially if we are to capitalise on the prospects offered by being a preferred African maritime partner and major shipbuilding hub. Building new, requisite skills not only betters the sector on the ground, but provides another exportable asset.
Outside of these prospects, South Africa is missing out on the opportunity to position itself as a favourable port destination. We face stiff competition from Walvis Bay in Namibia and Maputo in Mozambique in attracting foreign shipping companies servicing Southern Africa. However, relooking our port costs, charges and services; efficiencies; and our overall attentiveness to what international shipping clients want (i.e., exceeding client expectations) could radically change how ship owners, countries and clients view and use South African ports. The will is certainly there.
The Covid-19 pandemic and its fallout is projected to be felt for at least the next eight months. Then, economies the world over are expected to bounce back.
How will South Africa do this?
With high unemployment rates and slow economic growth, we need to look to ‘economic igniters’ to fuel our economic recovery.
The maritime industry is such an igniter. It has the power to play a leading role in a viable, growing economy that trains, develops and employs our citizens. It has the potential to provide economic opportunities where these core skills and competencies can be maintained and further developed as the economy grows. The sector’s current employment potential, albeit not optimal, is proof of that.
I believe South Africa has all the components necessary to build a strong, vibrant sector, and that from the recent crises will spring the most fortunate opportunities. But we must be prepared to actively identify, pursue and realise those prospects.
This is no different to the convictions and deliberate actions undertaken by the world’s most successful CEOs. Relentless determination is now our clarion call.
Paul Maclons – CEO of AMSOL