1. Presentation to the Portfolio Committee 05 April 2005 The Allocation of Long Term Commercial Fishing Rights

2. Background: The Allocation of Medium Term Fishing Rights: 2001 to 2005 First ever multiple year rights allocation in South African commercial fishing First ever multiple year rights allocation in South African commercial fishing Purpose and Objectives Purpose and Objectives –Effect further transformation of the industry –Establish economic stability in the industry to stimulate job creation and further investment –Sustain or reduce fishing effort to ensure sustainable resource management Challenges (1994) Challenges (1994) –1% of fisheries black owned ; 0% black managed –Transformation to be effected with less fish –400 right holders in total Results Results –66% of all fishing rights are held by blacks or black controlled entities (50%+1); –70% of all fishing rights are held by SME’s –3930 commercial rights are currently being exploited –South African hake fishery only hake fishery in the world to be MSC certified –All our fisheries are well managed but currently maximally exploited, save for some line fish stocks and abalone, which are near collapse

3. South Africa ’ s Fishing Policy: 2005 and Beyond Broad Based Black Economic Empowerment Biology of the target resource Ecology in which target resource is found Economic and Social Development Black and female equity ownership; Black and female equity ownership; Black and female control of management; Black and female control of management; Compliance with Employment Equity and Skills Legislation; Compliance with Employment Equity and Skills Legislation; Worker empowerment (share schemes); Worker empowerment (share schemes); CSI (1% and more to be considered); CSI (1% and more to be considered); Affirmative Procurement Affirmative Procurement Managed through the setting on an annual basis of Total Allowable Catch and/or Total Applied Effort limitations Managed through the setting on an annual basis of Total Allowable Catch and/or Total Applied Effort limitations The Ecosystems Approach to Fisheries (EAF) Management is an international obligation determined at WSSD with a deadline of 2010 The Ecosystems Approach to Fisheries (EAF) Management is an international obligation determined at WSSD with a deadline of 2010 Fisheries is an important food source. It also provides important jobs and livelihoods for thousands along our coast Fisheries is an important food source. It also provides important jobs and livelihoods for thousands along our coast

4. Intervening in the 2 nd Economy and Growing the 1 st Economy The 2 nd Economy Interventions The 2 nd Economy Interventions  Allocating Long Term Rights and access to capital  Geographic Justice  “Facilitating Access” (fees; application forms; language – see further below);  Allocating inshore resources to local fishers not large companies  Neutralising monopolies in the small fisheries in particular  Researching new fisheries Growing the 1 st Economy Growing the 1 st Economy  Allocating rights within a legally sustainable framework  Supporting investment in infrastructure and rewarding value adding and job creation  Rewarding adherence to BEE and adherence to equity and skills legislation  Identifying and eliminating fronting Fishing: 1% of GDP; Coastal Resources: 30% of GDP

5. What Informs our Policies? South African Law (Statute and Case Law) South African Law (Statute and Case Law)  Section 24 of the Constitution  Broad Based Black Economic Empowerment Act and Codes of Practice  Section 2 of the MLRA;  High Court, SCA and Constitutional Court Judgments (48 fisheries cases during 2002-2004) International Law and Regional and International Obligations International Law and Regional and International Obligations  United Nations (in particular the FAO)  Regional Fishery Management Organisations Learnings, Izimbizo, and ad hoc Consultations Learnings, Izimbizo, and ad hoc Consultations  Learnings from medium term process  Comments and Criticisms from Izimbizo State of the Nation Addresses (2004 and 2005), Ministerial Budget Votes and Interviews State of the Nation Addresses (2004 and 2005), Ministerial Budget Votes and Interviews January 8 th Statement by the African National Congress January 8 th Statement by the African National Congress  “ The People Shall Govern ”  “ The People Shall Share in the Wealth of the Country ”

6. Policy Structure General Fisheries Policy (clustered approach to fisheries management) General Fisheries Policy (clustered approach to fisheries management) 19 Fishery Specific Policies 19 Fishery Specific Policies Cluster A Hake Deep Sea Trawl Hake Inshore Trawl Horse Mackerel Small Pelagics Patagonian Toothfish South Coast Rock Lobster KZN Prawn Trawl Cluster B WCRL (Off Shore) Hake Longline Squid Tuna Handline Seaweed Shark Long Line (Demersal) Cluster C Handline Hake WCRL (Near Shore) Cluster D Oysters White Mussels Beach Seine Nets KZN Beach Seine (Pilchards)

7. Hake Deep-Sea Trawl *Fishery worth R1,4 billion annually *Employs 8800 persons directly *Asset value estimated at R700 million

8. Hake Deep-Sea Trawl Policy

9. Hake Deep-Sea Trawl Policy (cont…) Over-all Sectoral Objectives Over-all Sectoral Objectives –Improve the transformation profile –Ensure the long term sustainable utilisation of hake stocks –Manage all known impacts on the marine ecosystem affected by trawling, including preventing and reducing by-catches –Redistribute TAC rewarding BEE entities & SME’s –Exclude poor performers –Job creation –Economic and environmental sustainability Duration Duration –15 years How do the quantum pools work? How do the quantum pools work? –10% for SME –10% for Transformation –20% for Performance

10. Seaweed *Employs 1700 persons directly *Fishery worth approximately R6 million annually

11. Seaweed Policy

12. Seaweed Policy (cont…) Over-all Sectoral Objectives Over-all Sectoral Objectives –Improve the transformation profile –Value adding to seaweed harvested –Increase the number of participants –Encourage right holders who do not engage in seaweed beneficiation to instead join with local communities in application for seaweed harvesting rights –Economic viability of environmental sustainability of the fishery Duration Duration –10 years New Entrants New Entrants –Applications from new entrants are encouraged

13. Hake Long Line *Employs 6800 persons directly *Fishery worth approximately R130 million annually * Asset value estimated at R750 million

14. Hake Long Line Policy

15. Hake Long Line Policy (cont…) Over-all Sectoral Objectives Over-all Sectoral Objectives –Maintain or improve the transformation profile –Encourage investment in vessel and processing and marketing infrastructure, and jobs –Mitigate against avoidable by-catch and to eliminate bird strikes –Facilitate research on impact of long lining on hake stocks –Affirm applicants whose registered place of business is in the Eastern Cape –Economic viability of environmental sustainability of the fishery Duration Duration –15 years

16. How are Fishing Rights Allocated? Step 1: Consultation Draft fisheries policies are drafted and gazetted Draft fisheries policies are drafted and gazetted Consultation with interested and affected parties (best practice as it combines both notice and comment and public inquiry) Consultation with interested and affected parties (best practice as it combines both notice and comment and public inquiry) Receipt comment and amend policies Receipt comment and amend policies Step 3: Verification, Evaluation and Decision- Making Every application receipted is downloaded onto an electronic database; information is verified and separate databases established for vessels, ownership etc Every application receipted is downloaded onto an electronic database; information is verified and separate databases established for vessels, ownership etc A group of independent legal advisers then evaluate each application in terms of criteria and weighting determined by the decision- maker and is overseen by the DM A group of independent legal advisers then evaluate each application in terms of criteria and weighting determined by the decision- maker and is overseen by the DM Decisions taken by decision-maker Decisions taken by decision-maker Step 2: Invitation and Receipting Each cluster of fisheries is invited to apply on a staggered basis Each cluster of fisheries is invited to apply on a staggered basis Receipting of some 5000 anticipated applications will be both central and regional and overseen by Deloitte Receipting of some 5000 anticipated applications will be both central and regional and overseen by Deloitte Step 4: Appeals Once notified by DM, every applicant may appeal to the Minister within 30 days Once notified by DM, every applicant may appeal to the Minister within 30 days For every appeal, the Department drafts a report (2300 in 2002/2003) For every appeal, the Department drafts a report (2300 in 2002/2003) Minister takes decisions based on appeal and report. Minister takes decisions based on appeal and report.

17. How are decisions taken? All fishing rights allocation processes are polycentric and criteria based. All fishing rights allocation processes are polycentric and criteria based. Once all applications are receipted and databases analysed, weighting and detailed criteria are designed to meet objectives. Once all applications are receipted and databases analysed, weighting and detailed criteria are designed to meet objectives. The criteria: The criteria: Exclusionary criteria: (improper lodgements, material defects, essential requirements) Exclusionary criteria: (improper lodgements, material defects, essential requirements) Balancing Criteria (where must the line be drawn?) Balancing Criteria (where must the line be drawn?) Tie-Breaking criteria Tie-Breaking criteria Quantum/Effort Criteria Quantum/Effort Criteria

18. Checks and Balances: Process Security and Integrity Allocating fishing rights worth R70 billion Process security and integrity Process security and integrity NIA scrutiny of offices NIA scrutiny of offices Forensic Auditing and Verification: Internally and Externally Forensic Auditing and Verification: Internally and Externally Deloitte Forensics (Pty) Ltd Deloitte Forensics (Pty) Ltd Independent Project Managers Independent Project Managers The Resolve Group (Pty) Ltd The Resolve Group (Pty) Ltd Independent Legal Advisers Independent Legal Advisers Professor Halton Cheadle Professor Halton Cheadle Advocate Johan de Waal Advocate Johan de Waal

19. Beyond Fishing Allocations Investing in 12 new fisheries (3 in 2004/2005); Investing in 12 new fisheries (3 in 2004/2005); Investing further in Aquaculture to reduce pressures on capture fisheries; Investing further in Aquaculture to reduce pressures on capture fisheries; Investigating alternative sustainable livelihoods such as facilitating further economic development in fishing harbours; Investigating alternative sustainable livelihoods such as facilitating further economic development in fishing harbours; Expanding access to non-consumptive tourism based activities such as SCUBA diving, boat based whale watching and white shark cage diving Expanding access to non-consumptive tourism based activities such as SCUBA diving, boat based whale watching and white shark cage diving