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Session aims to establish model for measuring the ocean economy

Session aims to establish model for measuring the ocean economy

An effort to define the oceans economy

SOUTH AFRICA: The South African International Maritime Institute (SAIMI) has embarked on the process to accurately define the country’s ocean economy with the view to being able to accurately quantify its contribution to the nation's overall economic development.

At a round table discussion facilitated by SAIMI in Pretoria yesterday and attended by several academic institutions, Statistics South Africa, SETAs, the Department of Trade Industry and Competition (DTIC)  as well as the Department of Forestry, Fisheries and the Environment (DFFE) as the convener of the Ocean Economy Master Plan – Odwa Mtati, CEO of SAIMI noted that the process aimed to achieve a greater understanding of the sector.

“To what extent does the ocean economy contribute to the country’s GDP?” he asked noting that this was the question that needed to be answered as the working group moved forward. Yesterday’s session represented the second meeting with further deliberations planned for the first quarter of 2024.

Academics are proposing two possible definitions of the ocean economy – one in terms of its proximity to the ocean and one in terms of its gross value add by ocean natural resources across industries that form a supply chain of the final product.

Noting the DFFE’s contribution to the development of an Ocean Economy Master Plan, Mtati welcomed Temba Tand from the Department and invited him to share an update on the master plan and its implementation.

According to Tand, 13 small working groups have been established to work towards an integrated plan that seeks to promote transformation and skills development; develop enabling legislation; provide research support and understand the full value chain of the oceans economy.

The DFFE has undertaken industry consultations since 2020 – most notably in the fishing and aquaculture sectors, but more recently within the oil and gas as well as marine transport and manufacturing sectors.

Currently draft implementation plans have been completed by the marine manufacturing and repairs as well as the marine transport working groups.

Comments on the implementation plan produced by the oil and gas working group are being considered while those for the fisheries plan are being consolidated. The aquaculture working group, however, has extended consultation on its draft implementation plan.

A comprehensive list of commitments has been created for each working group and, according to Tand, the next phase will include the appointment of a service provider to consolidate this work to write and deliver the finalised Oceans Economy Master Plan.

While the procurement process has reportedly been initiated, no timelines were provided for the anticipated completion and delivery of this document.

The remainder of the morning session was handed over to presentations from academics on the current progress and ongoing work being undertaken under the auspices of the attempt to quantify the ocean economy by SAIMI.  

Providing extensive background on the establishment of a definition, Stephen Hosking, noted the Organisation for Economic Co-operation and Development’s (OECD) seven criteria for what constitutes the economic activity of the ocean economy as a basis for the two proposed definitions – as he emphasised the benefit of gaining a clearer understanding of the ocean resources.

He was also clear in establishing that the concept of the ocean economy did not necessarily equate to that of the blue economy – and that any adopted definition should necessarily support the intentions of policy that seeks to pursue economic growth and ensure sustainable development.

DEFINITION ONE:

The ocean economy is the formal and informal economic activity in administratively definable regions that is founded on the economic advantage of being located near the ocean and is mainly dependent on ocean natural resource inputs in production.

DEFINITION TWO:

The ocean economy is the formal and informal economic activity (gross value add) that is dependent or founded on the exploitation of the ocean’s natural resources over the entire supply chain of final goods and services, including producing goods intended to be used in the ocean.

 

Operation Phakisa established the need for continuous measurement of the ocean economy, but this has not materialised. As such, no recent or current analysis exists that can help provide an understanding of the year-on-year expansion (or contraction) of the value of the various maritime sub-sectors.

Highlighting various methodologies for measuring the ocean economy's contribution to a nation's Gross Domestic Product (GDP), Hosking discussed the geographic method, the satellite accounting approach, and the assessment of expenditures on final goods and services reliant on ocean natural resources for their production. According to him, each method offers a particular perspective on assessing the economic impact of the ocean economy within a country.

The idea of the satellite accounting framework seems to have found favour with SAIMI as it already exists for the tourism industry and is being proposed to analyse the effect of conserving biodiversity in South Africa.

Acknowledging the complexity of creating such a system for examining the ocean economy, Hosking said that the scope of its industrial contribution was notably broader. He, however, pointed to a recently published Norwegian ocean economy account as an example from which to draw.

He also warned that the gross contribution of the ocean economy to the GDP should necessarily be adjusted to consider any negative impact that it has on the ocean’s natural resources.

Joining the session virtually, Sarah Taylor furthered the discussion on the development of an ocean economy satellite account (OESA) for South Africa to discuss some of the limitations around data availability. She is undertaking a pilot study that aims to define the scope of the country’s ocean economy for an OESA.

In so doing South Africa would join countries such as Canada, Portugal, the USA and Norway in creating such methodologies to measure and monitor their ocean economies. She notes that the OECD has already established a blueprint for this.

In South Africa, however, she is concerned about the limitations imposed by the lack of complete data sets on the ability to populate a satellite account.

Further presentations from researchers connected to SAIMI showed the beginnings of information being collected from a regional analysis of the ocean economy most notably in the Eastern Cape. A final presentation by Ken Findlay, Research Chair: Oceans Economy at the Cape Peninsula University of Technology provided more perspective on the social management of exploiting South Africa’s natural resources within the context of a national satellite account system.

While the session certainly provided a depth of context for measuring the ocean economy, many in the industry will be eager to see accelerated progress in this regard – as well as clarification on the final version of the Oceans Economy Master Plan.

It is almost a decade on from the launch of Operation Phakisa in 2014 which was established to provide a quick and fundamental governmental intervention to facilitate the growth of the ocean economy. Since then, global conditions as well as the lack of ability to pivot accordingly have caused certain sectors of the maritime industry to actually contract.

This, coupled with a delay in the delivery of enabling legislation, has frustrated the potential for growth. As such, the delivery of a measurement tool that will result in an improved economic environment for seeing an expanded ocean economy is required sooner rather than later.

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