1. An economist’s perspective on the contribution of the ocean sector to African economies Stephen Hosking, NMMU 22 May 2014

2. Africa faces many challenging oceans economics policy issues and responsibilities Arise from the desire to simultaneously - exploit the resources and opportunities and optimize the long-term yield of the resources - fulfill the role of a steward of the ocean resources and environment. Translate into needs to manage the resources: - within its countries exclusive economic zones and the continental shelf zone (a limited economic jurisdiction) - but also beyond this.

3. Satisfying these needs requires a range of facilitation efforts, like damage prevention, assessment and restoration (stewardship) providing infrastructure that facilitates and sustains coastal tourism and recreational activity and port activity trade policy that enhances the coastal economy managing fishing and other marine life extraction encouraging and managing the mining of minerals in the seabed stimulating freshwater and energy production using the ocean managing the tradeoffs related to all of the above pursuits How well have African countries done in satisfying these needs?

4. Partly in response to the stewardship obligation The international community has become more accommodative of requests to extend the ‘ownership-management’ rights of countries to the ocean resources nearest them The legal framework for this accommodation is defined by the United Nations Convention on the Law of the Sea (UNCLOS) as ratified in 1982.

5. Along with the stewardship responsibility has come additional opportunities as wel l And as resource availability on land becomes less able to satisfy demand (due to increased population and economic growth), As international trade grows in importance as a determinant of the welfare of Africans, these opportunities will undoubtedly assume greater importance

6. Need for information about the contribution of the ocean sector In 2012 the South African Department of Environmental Affairs declared one of its four key strategic goals to be: ‘informing stakeholders of the value and sustainable use potential of ocean and coastal ecosystems and the role of stakeholders in contributing to ocean stewardship’ (Government Gazette, 2012: 65). So we may know less than we should.

7. This presentation aims to make a small contribution to this knowledge It is analytically useful to calculate the contribution made by the mining and agricultural sectors of the economy, and also to calculate the contribution of what we may call the ocean sector of the economy relative to a ‘land’ sector. An estimate of an ocean sector contribution estimate provides a snap shot for a given period of the level of economic exploitation of ocean resources and environment relative to the land resources and environment. The exercise of estimating the contribution is that at the macro level can alert us to income gaps, that is current unrealised income generating potential at the micro level

8. Alternative methods of apportioning GDP into ocean and non-ocean parts One method uses ocean ‘closeness’ as the reference for apportioning GDP. The alternative (preferred) method is to divide the value added per economic sub-sector (and sub-set) into ocean and non-ocean parts and sum the ocean parts.

9. What do we mean by the ocean sector – case of South Africa?

10. Clearly activities related to stewardship responsibility of ocean area is part of it It stretches 3 924 km along the coast from the Orange River mouth in the West to the Mozambique border in the East and a distance of 370 kilometers from a defined coastal baseline (a line connecting mean low water marks) out into the Southern Atlantic Ocean in the West and Western Indian ocean in the East, and includes the islands of Prince Edward and Marion. The size of South Africa’s Exclusive Economic Zone is 1 553 000 square kilometers, greater than the land area of the country (which is 1 219 090 square kilometers). It is governed in terms of South Africa’s Maritime Zones Act of 1994.

11. But stewardship activities are only one aspect of the ocean sector – trade encompasses more Trade covers much more than simply the area assigned as a South African stewardship responsibility It includes the exploitation of the resources in this area plus all trade maritime related activities

12. Some research findings I led a group that applied the value added apportionment method to South African GDP data for 2010. The data showed value added to GDP at the third digit level of the standard industrial classification code list (ICCL or SIC)- which classifies value added by ‘establishment’. We found: - in 2010 the contribution of the ocean-linked sector to GDP was about 4.4 per cent. - in 2012 the job contribution of the ocean sector was about 640 000.

13. Estimated value added for all sectors in the SA ocean sector - 2010 Industrial sector (and standard industrial code in brackets) Identified sub-sectors with ocean sector qualifying parts in R millions (total industry value added in parenthesis) Proportion of sub-sector qualifying as ocean Sector Ocean sector contribution in each sub-sector In R millions (% of total in parenthesis) Proportion of ocean sector value added to industry sector value added (%) Total for primary sector 25 078 (296 158.1) 18 724.3 (17%) 6.3 Total for secondary sector 197 881.38 (542 308.4) 15 280.2 (14%) 2.8 Total for tertiary sector 1 017 365.3 (1 656 849.2) 76 131.8 (69%) 4.6 Total for primary, secondary and tertiary sectors 1 240 324.68 (2 495 315.7) 110 136.34.4

14. Conclusion The current relative smallness of the ocean sector contribution, despite the large area covered by it, does not imply that South Africa can almost do without the ocean - the ocean’s influence is a necessary and non-substitutable input in all economic activities What income gaps did we come across in the process of deducing the ocean sector contribution?

15. Example of fisheries – consider 2008 estimates of stock status Fishery Status % of total - Global % SA - inshore % SA - offshore Under exploited3 7.4 Moderately exploited12 Fully Fished/exploited531648.1 Over fished281114.8 Recovering from depletion 1 Under review – uncertain 529.6 Depleted368 Total100

16. Reported problems in the ocean fishery sector we came across Due to the accessibility of the inshore fishery resources to a wide range of marine user groups, they are more difficult to manage. Users include traditional linefishers, recreational fishers, and inshore trawl and longline fisheries. Illegal and uncontrolled harvesting or poaching has a major negative impact.

17. Examples of poorly managed inshore fishing Illegal abalone harvest is estimated to exceed the legal one by 10 times. The West Coast rock lobster fishery peaked in the early 1950s with an annual catch of 18 000 tonnes. Catches declined by nearly half in the 1960s indicating that the high catches of previous years were unsustainable. The current status of the West Coast rock lobster fishery is it requires a long recovery phase

18. Offshore commercial fisheries The Hake fishery is SA’s single most valuable one. The current biomass of deep-water hake was estimated to be about 15% of pristine in 2008, i.e. over-fished Fishery management should focus attention on maximising net benefits, such as social and economic yield, rather than purely on biological management strategies and short-term political popular ones. This does not seem to be what is being done with hake fishery management.

19. Our guess at the fisheries sector income gap was Due to : Inconsistent and (sometimes) inappropriate and ineffective governance/management/control (e.g. of inshore fishing), Increased uncertainty in the allocation of fishing quotas Misallocation of fishing quotas to fishers who are unlikely to be able to link to high value markets (like in the allocations of white sand clams) Management that encourages the under- and mis- utilisation of lower-value fish species (anchovies vs hake). The actual current net economic benefits from marine fisheries may be only yielding about 60% of the potential net economic benefit.

20. The end