Oceans economy offers reprieve for Eastern Cape’s jobless

The Covid-19 pandemic, with its various iterations of lockdown, has decimated the SA small, medium and micro enterprise (SMME) sector over the past 18 months. According to a December 2020 McKinsey report, almost overnight about 60% of businesses were under threat of closure.

The report adds that while the government acted swiftly to provide relief to vulnerable businesses through the Reserve Bank loan guarantee scheme, only about 8% of the available funds had been disbursed (McKinsey estimates this to equate to 12,000 businesses out of 2.5-million SMMEs, or less than 1%, that formally benefited from the scheme).

Small businesses are still under unprecedented strain throughout the country, as shown by Stats SA’s recently released unemployment figures for the first quarter of the year.

In terms of the scale of crises we face as a nation the two that require the most urgent attention are unemployment and power. They are also linked, as I have seen in the Eastern Cape, where the livelihoods of individuals, families and entire communities have been obliterated by the effects of load-shedding, as businesses — small and large — have battled to stay afloat.

Despite the national unemployment rate being little changed at 32.6% in the first quarter (itself a record high), the Eastern Cape remains the province afflicted with the highest rate of unemployment at 43.8%, a searing indictment of the lack of economic opportunities in the region.

The Eastern Cape Socio-Economic Consultative Council has said that at 56% Nelson Mandela Bay’s youth unemployment rate leaves other municipalities such as Tshwane (51.8%), Buffalo City (47.9%) and Ekurhuleni (47.3%) in its wake. Something must change to remedy this.

Studies offered

The maritime sector or “oceans economy” encompasses various marine-related industrial activities such as the building, operation and maintenance of vessels, bunkering, the fishing economy and coastal & marine tourism. About 25% of the SA coastline is situated in the Eastern Cape, and Nelson Mandela Bay’s two ports, at Gqeberha and Ngqura, have a critical role in the trading and infrastructural hub of the province, including the movement of clean cargo, automotive parts and vehicles.

To emphasise the relevance of the oceans economy in the launch of the SA International Maritime Institute in 2014 and establishment of the specialist Ocean Sciences Campus in 2017 at the Nelson Mandela University, where maritime and marine sciences studies are offered, and the establishment of the faculty for maritime training mark, are an important milestone in the development of the network of maritime professionals, which over time should aid the growth of the local maritime sector.

In September 2020 the Eastern Cape provincial government hosted a webinar centred on how a post-Covid world presents opportunities to refocus priority areas for maritime economic development. The participants agreed that the province has a compelling value proposition for investors in the oceans economy, and that it is an opportune moment to act to leverage on this proposition.

Industry development initiatives are necessary, including the establishment of a Maritime Industry LED Fund to facilitate the entry and development of small black businesses, as well as rural economy development process that will ensure progress is achieved in alleviating joblessness.

Not delivered

The national government’s decision to implement the department of mineral resources & energy’s risk mitigation independent power producer procurement programme is welcome. We believe this will go some way in mitigating against further job losses in the region and should lessen some of the strain on the small businesses that have been hardest hit by the lack of economic activity brought on by Covid-19.  

Bolstering the maritime economy is a critical priority for the province. Operation Phakisa, though commendable, has not yet delivered on its mandate in the province pending the rollout of the oceans economy master plan. It is anticipated that identified areas, including marine transport & manufacturing, offshore oil & gas exploration, aquaculture & marine protection services and ocean governance, will also unlock the economic potential of the Eastern Cape coastline.

Though large-scale financial investments were attracted to maritime opportunities in SA through Operation Phakisa, they have not been deployed to benefit emerging small businesses and particularly, black-owned businesses. Karpowership has however committed to investing in local communities and businesses to drive economic change and foster partnerships. The company intends to invest R270m in local businesses as enterprise and supplier development contributions, and spend more than R4bn on local procurement over the course of the project.

This is the kind of commitment the Eastern Cape needs to ensure our people and businesses are positioned to leverage the emerging opportunities in maritime, power, transport and new gas industries in SA. The delivery of Karpowership’s three projects would cause an important step-change not just in our ability to deliver energy security to an economy in dire straits, but also a critical boost as we work towards a more inclusive maritime economy that unlocks opportunities for black empowerment and access to commercial maritime ventures in SA.

• Sonti chairs the Eastern Cape Maritime Business Chamber.