The State of the Maritime Nation

Let’s forget about the catwalk (and cat fight) that the occasion of the annual State of the Nation Address (SoNA) has become for a minute and look at how the maritime industry has been framed over the last few years in the presidents’ addresses.

The launch of Operation Phakisa in 2014 did help elevate the maritime industry’s status within government and this has been reflected in the content of several SoNAs. But it’s interesting to deliberate on how much of this has translated into real positive government action to improve challenges faced by the ocean economy.

2017: President Jacob Zuma’s last SoNA

Having launched Operation Phakisa for the ocean economy in 2014, Zuma commented in his 2017 SoNA that the “Big Fast Results Methodology” approach to unlock growth was “proceeding well”.?

It should be noted that, even at this time just three years after the intervention was introduced, there were some serious delays in delivering on many of the objectives – particularly in the port sector.

Zuma also referred to the South African Navy’s participation in Phakisa and confirmed that they were preparing to “host the government garage concept for all state-owned vessels in Simon’s Town, including the maintenance and repair of government-owned vessels, through the newly established South African Navy/ARMSCOR/Denel partnership”.

Well, as many may be aware, this ambition has not materialised. In fact, according to many sources, the state of the Simon’s Town dockyard is anything but ideal and certainly not capable of repairing the entire government’s fleet.

It’s a nice idea though.

Zuma also addressed the mining sector and referred to the Minerals and Petroleum Resources Development Amendment Bill which had been sent back to Parliament at the time to address issues relating to the public consultation process.

Despite his commitment to finalise the Act, this was not done so and the Bill ended up lapsing.

Noting the 100th anniversary of the sinking of the SS Mendi, which left 646 soldiers dead in 1917, Zuma announced that Armed Forces Day would be used to mark the centenary commemorations of the incident.

With Phakisa still under five years old and hopes that it could deliver on its objectives still alive, Zuma’s last SoNA provided a reasonable, despite overly optimistic prediction of growth for the industry.

2018: President Cyril Ramaphosa’s first SoNA

Many will remember Ramaphosa’s passioned plea at the end of his first SoNA as he quoted Hugh Masekela’s lyrics to Thuma Mina. The verse essentially envisages an ethos of people putting their hand up to help. “I wanna lend a hand – Send me”, he said concluding his speech with the quote.

Following the controversial Zuma leadership, South Africans were largely inspired by this call. When he took a walk on the Sea Point promenade while in Cape Town for the SoNA event, people flocked to shake his hand and many felt it was, indeed, a new opportunity for change at government level.

“Our task, as South Africans, is to seize this moment of hope and renewal, and to work together to ensure that it makes a meaningful difference in the lives of our people,” he said.

Although not looking directly at the maritime sectors, Ramaphosa commented on the need to process the Mineral and Petroleum Resources Development Amendment Bill, noting that it could be “reasonably finalised during the first quarter of 2018”.

“The Bill, once enacted into law, will entrench existing regulatory certainty, provide for security of tenure and advance the socio-economic interests of all South Africans,” he said.

Ramaphosa also touched on the Africa Continental Free Trade Agreement and the importance attached to South Africa taking over the chair of the Brazil, Russia, India, China and South Africa (BRICS) group of countries.

Corruption and the poor performance of State-Owned Enterprises was acknowledged as an issue. Seven years later these remain an issue that impact on the maritime sectors as well as many other sectors. The dismal and declining port performances since this SoNA should be noted.

Although not very salty in flavour, the address did feel like a fresh ocean breeze for the country as a whole.

2019: President Cyril Ramaphosa returns for Take Two.

In 2019, Ramaphosa addressed the state of State-Owned Enterprises much earlier in his speech saying: “we have taken decisive measures to improve governance, strengthen leadership and restore stability in strategic entities”.

Although not including Transnet in his first reference to SOEs, he did circle round to the topic and noted that new boards with credible, appropriately experienced and ethical directors, had been appointed at Eskom, Denel, Transnet, SAFCOL, PRASA and SA Express.

Despite his indication that the government was making progress in restoring the integrity and capacity of strategic SOEs, the ensuing years have shown that not all of these changes or boards were effective. ?

The ocean economy did get a substantial nod from the president who was still attaching the country’s aspirations for the sector on Operation Phakisa.

“Our mere positioning as a country means we can harness the potential of our oceans to grow the economy. Since Operation Phakisa on the Oceans Economy in 2014, we have secured investments of nearly R30 billion and created over 7,000 direct jobs.”

There has never been much of an effort to unpack this R30billion investment and how it was determined except to point to infrastructure development, marine manufacturing, aquaculture as well as the oil and gas sectors as recipients.

And, at the risk of being cynical, the creation of just 7,000 direct jobs in the five years since the launch of the intervention can only be described as pathetic when considered against President Zuma’s speech of October 2014.

“We are chasing a growth target of five percent by 2019,” Zuma told an audience at an open day held at the International Convention Centre in Durban.

Operation Phakisa catapulted the maritime sector into visibility promising a potential R177 billion contribution to the GDP and the creation of over one million jobs by 2033. Extrapolating that into five-year milestones would mean that by 2019, we should not have been celebrating the creation of a paltry 7,000 jobs when the trajectory would have required us to be well over 250,000!

Yet Ramaphosa trusted his advisors and allowed his speech writers to include expectations of further investments of R3.8 billion by government and R65 billion by the private sector over the proceeding five years. He noted that these investments could create over 100,000 direct jobs and more than 250,000 indirect jobs.

Those five years are now in the rear-view mirror so it will be interesting to see whether the president’s 2025 SoNA speech writers will provide an update on these numbers on Thursday this week.

Of course, February 2019 was indeed an exciting month in the country’s oil and gas sector and Ramaphosa alluded to the pending announcement by Total about their “world-class” discovery off the coast of South Africa.

“This could well be a game-changer for our country and will have significant consequences for our country’s energy security and the development of this industry,” he told the country.

Well, the discovery has not been the game changer we hoped for, and we heard last year that Total had withdrawn from the Brulpadda field. In the interim, however, South Africa’s neighbour has seized on developing their offshore oil and gas potential leaving South Africa in its wake still developing legislation and regulatory mechanisms.

“Government will continue to develop legislation for the sector so that it is properly regulated for the interests of all concerned,” said Ramaphosa in 2019.

Addressing issues relating to the slow progress of infrastructure development, Ramaphosa noted Cabinet’s decision to create an Infrastructure Fund in September 2018 and that the government would contribute R100 billion over a 10-year period, using this to leverage financing from the private sector as well as financing institutions.

2020: President Cyril Ramaphosa provides a reality check

There was a perceptible shift in the tone of the 2020 SoNA that had nothing to do with the impending impact of the COVID-19 pandemic and everything to do with the severe failings of Eskom and persistent loadshedding.

After two years of promising significant investment, the president is sombre about the state of public finances and confesses that the country’s debt is “heading towards unsustainable levels”.

“We cannot continue along this path. Nor can we afford to stand still,” he tells a country that is becoming increasingly frustrated by the seeming lack of progress.

He makes another two commitments including the establishment of a sovereign wealth fund and a state bank that will extend access to financial services to “all South Africans”.

Revisiting the subject of the under-performing SOEs, he says that the Presidential SOE Council will move from “the stabilisation of SOEs to repurposing these strategic companies to support growth and development”.

“After years of state capture, corruption and mismanagement, we are working to ensure that all SOEs are able to fulfil their developmental mandate and be financially sustainable,” he promises.

The subject of port congestion makes its debut in the 2020 SoNA and are described as “congested and inefficient”.

With no details of how he anticipates doing so, he says; “During the course of this year, we will undertake a fundamental overhaul of the Durban Port – the third largest container terminal in the Southern Hemisphere – to reduce delays and costs.”

Assuming the chair of the African Union, Ramaphosa also noted the importance of the African Continental Free Trade Area (AfCFTA) which was due to come into effect.

“Since I took office, we have built capacity in The Presidency and elsewhere in the State to fast-track progress on a clear list of urgent reforms,” he said drawing towards the conclusion of his address which again included the lyrics of a song of a local musician.

This time he hoped to inspire South Africans to believe that they were on the precipice of a new era as he quoted lyrics from Joseph Shabalala. Urging South Africans to face the challenges and live with dignity, he quoted; “As we rise to our destiny, a new age has begun.”

The words may well have been prophetic as the COVID pandemic took hold of the entire globe seeing most countries shutdown and order their citizens to stay at home while only essential services were permitted.

2021: President Cyril Ramaphosa calls on country’s resilience

Unsurprisingly, COVID took centre stage during the 2021 SoNA speech and probably even provided a welcome excuse for the lack of delivery on various commitments.

“Budgets had to be reprioritised, and many programmes had to be deferred,” he said. To their credit, however, the Infrastructure Fund had become operational, and a pipeline of projects had been identified.

Introducing the concept of Master Plans for various sectors and highlighting the signing of the Sugar Master Plan as well as the Clothing, Textile, Footwear and Leather Master Plan, it should be noted that the process to develop the Oceans Economy Master Plan (OEMP) on the back of Operation Phakisa was kickstarted in 2019, but was not included in his address. ?

To date the OEMP has not been completed and the Department of Forestry, Fisheries and the Environment (DFFE) issued a tender last year to contract a private service provider to undertake the process of finalising the document by addressing identified gaps. The tender has still not been awarded, however and the rate of DFFE tender cancellations does not bode well for this particular work.

Ramaphosa also introduced us to Operation Vulindlela in the 2021 SoNA. Operation Vulindlela aims to focus on reforms in the electricity, water, telecommunications and transport sectors, as well as reforms to the visa and immigration regime.

There are actually a number of Vulindlela port-related projects that have sailed under the radar, but that have actually gained some traction. Ramaphosa highlighted the desire to reposition Durban as a hub port for the southern hemisphere and develop Ngqura as the container terminal of choice here.

While this has not truly materialised, there have been some smaller Vulindlela projects that should be recognised. Perhaps we’ll look at these in a separate article on our website.

After a few more pronouncements on corruption and the need to work together, he told us we were a resilient bunch that could “get through this because we are a nation of heroes”.

This year he did not choose a local artist to quote but instead called on the words of Maya Angelou and her poem, Still I rise, which ends in the chant: I rise, I rise, I rise.

“People of South Africa, it is your country that calls on you to rise,” he concluded asking us to “march forward together to equality, to growth, to dignity and to recovery”.

2022: President Cyril Ramaphosa – up in flames?

Following a major fire, the SoNA moved from its usual home in the Chamber of the National Assembly, but that’s not the only thing that seems to have gone up in flames as many of the commitments and projections of previous SoNAs have not yet materialised and projects drag forward from year to year.

But the ever-optimistic Ramaphosa suggests that this can be improved in just a third of a year.

“We have given ourselves 100 days to finalise a comprehensive social compact to grow our economy, create jobs and combat hunger,” he told us.

While COVID remains at the centre of this SoNA speech, the president accedes that it is not the task of government to create jobs – but that of private business.

“The key task of government is to create the conditions that will enable the private sector – both big and small – to emerge, to grow, to access new markets, to create new products, and to hire more employees,” he says while not admitting to the lack of progress by government to do so by fixing the port sector, promulgating long-overdue legislation and addressing wasted public expenditure as well as the levels of corruption effectively.

These are obviously not only maritime-related issues and Ramaphosa admits that the “problems in the South African economy are deep and they are structural”.

And he admits that some of these deep and structural problems relate to the inefficiencies of the ports and railways.

“Over several years, the functioning of our ports has declined relative to ports in other parts of the world and on the African continent. This constrains economic activity,” he says despite having committed to addressing this issue in his 2020 address.

Now two years later he laments the issues being faced by the agricultural sector that is dealing with catastrophic delays at the ports as fresh produce remains “stuck in a terminal”. Fortunately, according to him Transnet is addressing these challenges and is “focused on improving operational efficiencies through procuring additional equipment and implementing new systems”.

He announces too that the port authority will seek private partners for the Durban and Ngqura container terminals to ensure that these will be operational by October 2022.

Well, that’s played out altogether differently, hasn’t it? Transnet’s decision to award the tender to run Pier 2 at the Durban Container Terminal to International Container Terminal Services Incorporated (ICTSI) in July 2023 resulted in a legal tussle initiated by APM Terminals in October in the same year.

Despite the intended deal being approved by the Competition Commission in October 2024, the matter has yet to be resolved with an interdict being granted to APM in November of the same year and appeals being heard in December.

Perhaps sitting on the periphery of the maritime sector, talks around the country’s hydrogen strategy have nevertheless piqued the industry’s interest as green hydrogen is discussed as a potential bunker fuel for future shipping.

Ramaphosa gives a shout-out to the development of a Hydrogen Society Roadmap for the next 10 years as well as a Green Hydrogen Strategy for the Northern Cape, supporting the development of a green hydrogen pipeline worth around R270 billion. These are ambitious strategies, and some cognisance needs to be taken of regional strategies in this regard – many of which are being fast-tracked as the international community views hydrogen as a solution to reduce Green House Gas (GHG) Emissions.

The oil and gas industry is once again included in the address with more promises to finalise the mining exploration strategy. “We will continue to support the development of the upstream gas industry, as it holds huge potential for job creation and broader economic development,” he adds.

It should probably be noted that pre-Phakisa, South Africa had made strides in establishing itself as a reputable player as the destination for the refurbishment and survey of oil rigs as well as the fabrication of certain modules for the industry.

Sadly, the lack of focus by the port authorities on maintaining the country’s ship repair facilities and the stalling of plans to prioritise the Port of Saldanha for this sector saw a steady decline in opportunities. In fact, one of South Africa’s oldest ship repair companies, DCD Marine closed shedding thousands of jobs that had come to depend on the oil and gas work being brought into our ports.

Returning to the topic of corruption and state capture, Ramaphosa confirmed that the Zondo Commission had already provided some feedback, and that action would be taken. The Zondo reports highlighted criminal activity in several SOEs including Transnet.

With no real clarity on the way forward for SOEs, he merely says that changes are in the pipeline as per the anticipated recommendations of the Presidential SOE Council.

There’s no inspirational quote from anyone famous at the close of the 2022 address, but South Africans are urged to rebuild the nation as they engage in a “battle for the soul of this country”.

2023: President Cyril Ramaphosa – hoping that things will change

Invoking some nautical themes, Ramaphosa opened his address with a call for hope; “hope that swells our sails as we steer our country out of turbulent waters to calmer seas”. ?

Telling the country that we are not defined by the oceans, rivers, minerals, talent and other positive attributes that it possesses, but rather by its hope and resilience, the president implied that despite not being capable of capitalising on these strengths, South Africans can take comfort in the hope that things will improve.

At the time we were certainly hoping to see the end of loadshedding. Loadshedding and COVID were still major themes in 2023, as is unemployment, corruption and poverty. But, for Ramaphosa it was about seeing “hope where there is despair”.

He rattled off some statistics, percentages and numbers, but to be honest given our ability to interrogate the figures and commitments he has made for the ocean economy in previous SoNAs, it is fairly easy to wave these cynically aside.

Remember the commitment to finalise private sector participation in Durban and Ngqura container terminals by October 2022 made in the previous SoNA? Well, Ramaphosa skims over this lack of delivery by simply postulating that Transnet will “conclude partnerships at the Durban and Ngqura container terminals, to enable new investment in our ports and improve their efficiency”.

He adds: “This will help our ports regain their global position as some of the most efficient ports once again.”

Well, we all know that the situation in the ports became even more untenable and the hope that the protracted process to award concessions to the private sector was the answer should not have become Transnet’s strategy to improve efficiencies in the short term.

Honestly there is very little in this SoNA about the progress of maritime-related issues that have been raised in previous years. The reality is that people cannot live on hope – and South Africa does need to define its future success on its distinct advantages including its strategic position on the international shipping routes.

2024: President Cyril Ramaphosa says it time to vote

The 2024 SoNA was delivered just a few months before the national elections and Ramaphosa’s opening statements revolved around the youth, transformation and employment.

Although asking the nation to celebrate the fact that the number of employed South Africans had increased, we are nevertheless reminded that the percentage of unemployment in the country has also increased. That’s not a win.

With a focus on the energy crisis and the need to seek renewable options, Ramaphosa highlights the intention to establish a new port in Boegoebaai in the Northern Cape to drive investment in green energy. “There is a great deal of interest from the private sector to participate in the boom that will be generated green hydrogen energy projects,” he says.

Obviously not a short-term project, it will be interesting to note his comments on the new port in this week’s address.

On the topic of ports, Ramaphosa notes that there is now a “clear roadmap to stabilise the performance of Transnet and reform our logistics system”.

“The number of ships waiting to berth at the Port of Durban – which has experienced severe congestion in recent months – has reduced from more than 60 ships in mid-November to just 12 ships at the end of January,” he reports.

Referring to the commitments made over previous SoNAs to introduce private participation into the Port of Durban, he confirmed that Transnet had appointed an international terminal “to help expand and improve its largest terminal at the Port of Durban”.

Given the litigation that ensued after this appointment and the continued court action, it will be worth noting if the president revisits this topic on Thursday.

Given the closure of the offshore bunkering operations in Algoa Bay at the end of 2023, Ramaphosa probably should have realised the irony in suggesting that the country was well-positioned to offer bunkering services for ships rerouting to avoid the conflict in the Middle East and the Red Sea.

While indications are that the offshore bunkering is poised to resume with a new tanker on South Africa’s flag ready to deliver locally refined bunker fuel to passing ships – this should not be seen as a direct result of any efficient strategy at government level.

As the last SoNA of the 6th Administration, Ramaphosa presented a list of achievements that included the commitment to “see through the work underway with our partners to end loadshedding and revive the performance of our ports and rail network”.

Ending off his address with a quote from Nelson Mandela, Ramaphosa posited that, although “we have come far – we still have a long way to go”.

Indeed, there is a lot to be addressed in the maritime sector. Despite some achievements, there is little doubt that many of the identified challenges could have been much closer to resolution than they are. The Big Fast Methodology promised by Operation Phakisa and referred to in several SoNAs has only delivered small slow solutions.

2025: President Cyril Ramaphosa – waiting for a headline

I’m popping some corn, pouring a glass of wine and ready to listen to this year’s SoNA. We cannot view each address in isolation and applaud the commitments and projections. We must anchor these side-by-side and understand that an annual speech is not a reliable reflection of the status quo.

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