CASE IN POINT | KZN EDTEA
by Andrew Ngozo
Realising the Economic Potential of South Africa’s Oceans
The DEA conducted a further study in 2013 to analyse the economic potential of South Africa’s oceans. The work demonstrated that the economic potential of South Africa’s marine resources could be optimised further. Overall, the oceans could generate an estimated gross domestic product (GDP) contribution of at least R129-R177 billion by 2033. According to the Department, some sectors will achieve their potential through current policies and plans but others will require individual strategic and implementation plans to unlock their value. In this regard, the Cabinet of the Republic of South Africa has approved the development of a five to 10-year strategic plan to unlock the growth.
An analysis of the oceans economy shows that it can be broadly classified into two areas: the Business as Usual and Potential New Growth Areas. The Potential New Growth Areas are currently creating little or no GDP contribution because the related industries are either nascent or
underdeveloped. They do, however, offer significant new economic potential in respect of GDP contribution and job creation. Foremost in this regard, one can cite the following sectors as primary areas of focus: marine transport and manufacturing, offshore oil and gas oil exploration, aquaculture and marine protection services and governance. The DEA reveals that these will be focus areas of the Ocean Labs where Delivery Labs will used to develop strategies for each growth area.
Without necessarily dwelling on the mandate of each Delivery Lab, we shall explain what they will entail. Each of the focus areas will be explored in individual Delivery Labs where each lab has a Director General (DG) sponsor from the most appropriate department. The DG owners will then invite public, private and social sector actors to participate. The four Delivery Labs will run simultaneously in the same venue and participants will be required to work fulltime in the labs for five weeks of intensive implementation planning. The Delivery Labs will be the second step in the Big Fast Results 8-step method to develop strategy. Here is how the 8-step method will unfold.
1. Strategic direction- multiple cabinet retreats to ascertain the direction needed
2. Labs- establish in detail what needs to be done
3. Open day- share lab output with people and seek their feedback
4. GTP/ETP Roadmap- stakeholders tell the people what they are going to do
5. KPI targets- setting key performance indicators (KPIs) for the whole cabinet
6. Implementation- problem solving and on the ground implementation
7. IPR/Audit- external validation on results achieved
8. Annual Report- stakeholders and main role players tell the citizenry what has been delivered
It follows that with such a grand plan of action; there will be a Delivery Labs methodology that will help catalyse transformational change. This will seek to determine and clearly define the What, Who and the How of the whole project. Firstly, the question to be asked is what the purpose of a delivery lab is. According to the Department, delivery labs are set up to create transparency, debottleneck and help resolve the most critical challenges facing a sector, and hence achieve key milestones faster than in a “business as usual” context. Secondly, in answer to the question: Who participates in a lab, the Department shares that the lab includes key stakeholders (20-30 people) relevant to solve the defined problem, and are selected from the public, private and social sectors. Thirdly, as to what happens in a lab the invited cross-organisational team works full-time in one location (five weeks) and the lab involves intense problem solving, supported by a facilitator team. With regards to how commitment to these labs will be secured, key stakeholders will be engaged continuously- every week and critical stakeholders will sign off on plans and will be accountable for the implementation. Lastly, in order to determine what the end products will be, a ‘three feet’ level implementation plan will be adopted. This will include agreed solutions, detailed execution plans with responsible owners across organisations, as well as timelines and targets.
Ship Building and Repair
According to Trade and Investment KwaZulu-Natal (TIKZN) the ship repair, ship building and boat building industries are other sectors that will help South Africa to realise the economic potential of its oceans. These industries have a long and proud history in Durban, having added immeasurably to its value and appeal as Africa’s leading port by providing ship owners and operators as well as the recreational and commercial boat fraternity with the knowledge and assurance that skills, expertise and availability are readily to hand. All three industry sectors have made great strides and significant investments in the local economy. They remain in the forefront of technical knowhow and skills development equal to the best available worldwide in their respective fields.
KwaZulu-Natal is already regarded as the second most prolific boat-building centre in South Africa so it’s no surprise that this sector is rapidly emerging as a significant growth industry with 25% of all South African boat-building companies based in this province. Currently the local ship and boat-building industry boasts good basic infrastructure, while tremendous possibilities exist around the Durban shoreline for the construction of ships, boats and maritime parts. Trade and Investment KwaZulu-Natal, the Provincial Government entity responsible for the local and international promotion and development of investment and export trade opportunities, is actively involved in the hard-hitting promotion of this critical economic sector and, especially, locally-based companies active in the industry, while also promoting KwaZulu-Natal as being home to two of Southern Africa’s major deep-water harbours – Durban and Richards Bay – and a strategic trade gateway to South Africa, Africa and the world. Its strategic location and highly developed industrial sector ensure a competitive edge for both local and foreign investors, as well as unique advantages for local exporters.
The South African boat-building industry has a high degree of international credibility, having doubled its exports since 1994. Numerous reports have shown that the industry has undergone an efficient industrial restructuring, making it internationally competitive with regard to price, quality – both in finish and sailing ability – and durability. Its products are highly acclaimed and have won a number of international awards. It also has a fine reputation among international boat designers, who often allocate orders and refer clients to South African boat-builders. World demand for ships is on the increase and investment in this sector in KwaZulu-Natal would create many new employment opportunities here.
Economic Benefits of the Shipbuilding and Repair Industry to South Africa
Direct and indirect employment
Contribution to the National Treasury
South Africa’s 10th Province
There has been quite a lot of talk about the potential of the untapped maritime sector, particularly in the KZN Province. CEO Magazine met up with Mike Mabuyakhulu, MEC: KwaZulu Natal Department of Economic Development, Tourism and Environmental Affairs (EDTEA) to share his perspectives about the maritime sector vis-à-vis the potential it holds for the province. According to him, “KZN is lucky to be blessed with the 10th province, the Indian Ocean with its nearly 900km coastline, which we have not even yet started to fully exploit. We also have the two biggest ports which, between themselves, handle between 65% and 80% of the country’s imports and exports”. That, alone, is an advantage and the KZN government, as is the whole of South Africa, are also cognisant of the fact that almost 94% of trade is seaborne, and it shall remain so for a long time to come.
The manner of operation in maritime is changing where operators are moving away from small shipping lines into mega ships creating hubs port where people will be moving from hub to hub. “For instance this can be moving from Shanghai, the biggest port in the world to the Port of Rotterdam in the Netherlands. With this in mind, we want to position ourselves in such a manner that we have a hub or port with unrivalled container handling capabilities. Hence we place emphasis on the need to invest in the dugout port in Durban which will be able to quadruple our capacity from the 2.7 million/TUs to about 20 million/TUs by 2040,” Mabuyakhulu points out. “It will be a huge and gigantic jump if that project materialises. That project is not only in the best interests of South Africa but of the region as well. It will become a phenomenal game changer and not just in nominal terms. It will change the face of the economy and that of the province, as it were, in a manner that has never been imagined before.
Exploiting the Blue Economy
However, over and above that, in preparing the province, and indeed South Africa, to seize the opportunities in the blue economy as it is often called in some circles, “we want to exploit what other nations have done in this industry: to exploit the comparative advantages available. We would want to learn from the Malaysians, among others, who came up with the concept of Life Centres. KZN appreciates the fact that the national government is willing to look at a pilot project of this nature”. This will, as indicated in preceding pages, have a particular focus on those sectors that will allow “us to catapult the maritime sector to the top such as marine transport/ transportation, marine aquaculture and the natural capital that exists in our oceans like shale, oil and gas.” Mabuyakhulu is quick to add that this does not by any means denote that focus will shift from tourism because, for example, the province is in discussions with partners in the Seychelles about the possibility of a yacht event. This is only one of the many possibilities and opportunities being explored.
The KZN government has created a maritime centre of excellence where people will be equipped with skills in this sector as it has been realised that maritime has the potential to create 800 000 jobs. “This will stand us in good stead against such countries as the Philippines and Indonesia where either boasts of having one in every four seafarers in the world. This shows how they have been able to successfully prioritise the maritime sector and thus position themselves well in that regard. Briefly, we are hard at work to ensure that we explore all the opportunities that are availed by the maritime sector,” he concludes.