State of the Maritime Industry Address

I am not going to comment on the State of the Nation Address (SONA) made last week by President Jacob Zuma except to say I did hear him mention the maritime industry as he acknowledged the importance of the fishing industry; the need to develop our ports and the focus on oil and gas for the development of Cape Town and Saldanha Bay. I am, however, going to comment on a speech made the night before SONA by Commander Tsietsi Mokhele, CEO of the South African Maritime Safety Authority (SAMSA).

Anyone who has ever listened to the CEO speak will know that he is constantly pushing the South African maritime agenda – and it seems that, while there is still much to be done, a lot of groundwork has been covered.

State of Maritime Industry

Here are a few highlights of his speech:

TREASURY TICKS OFF TAXATION: Mokhele highlighted the decision by South African Treasury last year to remove all forms of taxation on shipping. “I never thought in my living days that I would see South Africa Treasury moving on shipping tax when we have waited and worked so hard on the tonnage tax,” he said adding that although the industry was willing to accept a nominal tax, this gesture to help develop the industry was welcomed. Treasury has shaved tax contributions of seafarers; removed taxation on the sale of assets; and paved the way for shipping companies to trade in any international currency.

“I never thought in my living days that I would see South Africa Treasury moving on shipping tax when we have waited and worked so hard on the tonnage tax.”

THE BLUE ECONOMIC STRATEGY: In a similarly positive light, Mokhele reported that Cabinet had approved The Blue Economic Strategy for the country. “It talks to helping improve the lives of our people by taking and leveraging the assets of the industry; the expertise that is there. It is a strategy about development; it is a strategy about progress – and about giving the economy an upliftment,” he said. 

THE AFRICAN MARITIME DECADE: Coupled to the approval of the African Integrated Maritime Strategy (AIMS) 2050 made by the African Union Commission at the end of January was the announcement that 2015 to 2025 would be dedicated to the maritime industry.

“It means that the maritime sector has arrived where it needed to be. It has become an asset of of our people, politically endorsed, industry recognised opportunities and communities are involved,” said Mokhele.

NATIONAL MARITIME INSTITUTE: Having completed a feasibility study to assess the impact of establishing a National Maritime Institute, SAMSA has successfully concluded a deal with the Nelson Mandela Metropolitan University. On November 12 last year, the University passed a resolution to accept the custodianship of the National Maritime Institute. According to Mokhele, the Institute will be operational from April 1 this year and will coordinate efforts in maritime education. “We are not displacing the existing infrastructure, but providing cohesion in the development of programmes that are geared to the development of technology and innovation,” he said. 

MARINE TOURISM STRATEGY: Understanding that 80 percent of the United States of America’s tourism revenue originates from marine tourism, Mokhele’s announcement that SAMSA would unveil a Maritime Tourism Strategy during the course of the year, makes sense as a strategy to open the maritime sector to new entrants.

“Water programmes sell. They sell real estate, they sell activities, they sell everything – and therefore our marine strategy is going to be inclusive of the tourism strategy that we are going to unveil before the end of this year.”

MARINE MANUFACTURING STRATEGY: Another strategy scheduled to be unveiled during the course of the year is one that speaks to the marine manufacturing sector. Mokhele spoke about the need to develop the capabilities of the ship repair and ultimately the shipbuilding sectors.  Alluding to the potential of gearing up for the offshore oil and gas industry, Mokhele said “South Africa has to gear themselves up to become the hub service centre for the gas industry that is emerging on the east, but also to play a part on the existing oil and gas industry that is already established on the west of the continent.”

CELEBRATING SOUTH AFRICA’S 20 YEARS OF DEMOCRACY: Perhaps the most ambitious plans that Mokhele revealed were those relating to a planned cruise around the African continent. He aims to see an all-female crew navigate the SA Agulhas to visit nations in Africa that supported the liberation of South Africa. The cruise aims to also set up a fund for the development of women in Africa’s maritime sectors. SAMSA will approach industry to help sponsor this initiative.

SAMIC IS BACK ON THE CALENDAR: If you remember the landmark conference initiated by SAMSA in 2012, you may be pleased to hear that it is scheduled to return to the calendar in October this year. It will be a good opportunity to report back on resolutions taken at the last edition and decide whether the industry, government and other stakeholders have stepped up to the plate to see real development of the industry.

While these topics remain the highlights of Tsietsi Mokhele’s speech, he also spoke of the success of the cadetship programme; the ambitions to see ships return to the ships registry as well as the interest from various shipping companies to source South African seafarers to crew their fleets.

Yes, he told a good story, but we still all need to roll up our sleeves and get back to work. It makes no sense to endlessly debate the merits of a report back if we are not prepared to go back to our desks – irrespective of our views – and make things happen.

Conference Call rocks maritime sector

There are conferences aplenty in South Africa and Africa that plug into the maritime domain, but this week’s South African Maritime Industry Conference (SAMIC) hosted by SAMSA can truly be heralded as one that should repower the engines of the maritime industry in the country.

I sat there for the entire conference. I did not miss a minute of it. I ensured that every break-away group had a representative from the magazine in it – and we will publish a thorough and comprehensive report back of SAMIC in the next issue.

For those of you who did not attend and had to rely on newspaper reports of the highlights and headlines relating to the conference, please take comfort in the fact that the news that made it to daily newspapers relating to lack of legislation to bolster a ship registry; loss of bunker only opportunities or our lack of pollution fighting capabilities, should not be seen to represent the the entire focus of the conference. These are all headlines that spotlighted the industry during the SAMIC week and, while I am certainly not dismissing the importance of these facts, we as an industry know we are committed to addressing them, but we should also be able to walk away from the conference knowing that we did more than just air our dirty laundry.

And certainly, while we wont ignore the very real work that needs to be done to address those rather negative headlines; lets reflect on the positives that the conference highlighted:

  • Three Cabinet Ministers stood on the jetty in the V&A Waterfront on a dark cold winter’s morning to watch the SA Agulhas training ship depart with 32 cadets on board. That’s three Ministers who now have  more of a personal glimpse about what the industry can offer to young South Africans.
  • The new Minister of Transport, Ben Dikobe Martins, seemed well briefed and sounded committed to prioritising maritime matters in the Department of Transport.
  • Ruth Bhengu, Chairperson of the Portfolio Committee on Transport invited the industry to “knock on my door” to unblock policy and legislation before parliament.
  • Bridgette Gasa, National Planning Commissioner, admitted that the maritime sector had been “forgotten” in the National Development Plan and agreed to seek to correct the oversight.
  • A complete pipeline of skills development from primary to tertiary level for the maritime industry is being discussed at governmental level.
  • The Petroleum Agency reported that our offshore acreage is well marketed and fully subscribed with either exploration licenses or applications for exploration.  Increased activity in this sector is predicted in the next three to five years.
  • SAMSA launched an Industry Training Fund and raised significant funds directly at the Chairman’s Dinner on the second day of the conference.
  • CEO of SAMSA, Tsietsi Mokhele was summoned to meet with the President on Thursday and returned to alert the industry to the fact that he had proclaimed himself the governor of the Tenth Province to the presidency in an effort to convey the immense importance that the sector holds for the development of South Africa.
  • Entrepreneurs waiting to gain a foothold into the industry, stalwarts of the industry, government agents, neigbouring country officials, NGO’s and industry associations rubbed shoulders, debated, discussed and committed to a robust maritime sector.
  • The atrophy of conference delegates on the Friday afternoon was not significant!

Was SAMIC an all-encompassing solution to every problem facing the industry? Certainly not, but it was an excellent start that challenged the status-quo of conferences as a whole and the industry. We were not subjected to paper after paper, but rather given the opportunity to huddle down and shout out our opinions.

Was SAMIC totally representative of the industry? Well – no, there were a couple of industry players that perhaps should have been involved. Most notably was the absence of any representation from the Department of Agriculture, Forestry and Fisheries to engage with the fishing subsector, but there were others as well.

Was SAMIC completely unique in its topic selection? Hell – no, there were issues that have been debated at nausea for more than a decade in the industry, but there seemed to be an underlying will on a higher level than just industry frustration to move forward.

There is still a lot of work to be done. There is a lot of sensitisation to and education about the industry that still needs to happen at government level, but our new governor of the 10th province is the kind of man that has the ability to rally the troops; he has the passion to unite disparate sectors and he certainly seems to have managed to reach the ear of the president.

And for those of us that added our rock to the pile – let us live up to the commitment this symbolised and work to make our 10th province prosperous, influential and peaceful.

MARITIME ROCKS: Delegates at SAMIC were invited to take a rock, write their commitment on it and add it to the pile at the end of Day 2 at the conference.

Flying the Flag

Imagine if every car owner in the Western Province decided to license their vehicle in Gauteng. Imagine what that would do to the relevant municipal coffers and what impact it could have on their ability to deliver services. Essentially the monies collected from Cape Town vehicle owners would be used to benefit the lives of Gauteng drivers.

It would be crazy to think that we would want to enrich some other jurisdiction – or would it?

What if another town or suburb waived the need for our car to be roadworthy? Or the conditions of our chosen  licensing authority made our lives easier every time we had an accident? What if choosing a licensing authority also meant less taxation; fewer rules of the road or even access to cheap servicing? Now would you consider licensing your vehicle elsewhere?

Now suddenly the idea of driving around with a license plate that bears no relevance to your home address makes sense. Would it matter if you were forced to use Gauteng mechanics every time you required a service? Would you care if Capetonians no longer had access to employment based on this decision?

Choosing a flag – a matter of conscience or convenience?

This may sound ludicrous and you may wonder what it has to do with the maritime industry, but this is exactly what is happening in the world of shipping. As an owner of a ship that trades around the world, you have a global choice of where to license your vessel and many nations have spent time and money on creating Flag States that attract tonnage (ships) to their registry.

Choosing a jurisdiction or a Flag for your ship impacts on the way you manage and operate that vessel. The regulatory and legislative mechanisms associated with each Flag State will have implications on the manning, the financing and even the insurance of the vessel.

As one of the key trading nations on the African continent and with almost 3000km of coastline, you would not be forgiven for thinking that South Africa should have a robust ships’ register. The sad fact is, however, that we lost the last trading vessel on our register towards the end of 2010 and are unlikely to attract any significant number in the near future.

The Safmarine Oranje was the last trading vessel on the SA Ships' Register.

The Safmarine Oranje was the last trading vessel on the SA Ships' Register.

The reasons for the demise of the South African Ships registry are many and relate largely to the way in which some of our key maritime law is structured.

Over and above the obvious loss in potential revenue associated with a robust Ships Registry; we are putting all our youngsters keen to follow a career at sea at a distinct disadvantage. It stands to reason that all seafarers need to complete a portion of their training at sea and the lack of South African registered ships impacts directly on their ability to be placed as a cadet and gain valuable sea time.

Revisiting the car analogy above – it would be like saying all those with Learner’s Licenses from the Western Province would not have access to vehicles to gain practical experience before trying to pass their Drivers’ License because all of the cars in Cape Town were being used by learners from Gauteng as stipulated by the licensing criteria.

It’s certainly not a new debate for the industry, but given the government’s recent proclamations about job creation coupled with a well-documented shortage of seafarers (globally), it’s certainly an area that should continue to be addressed.