Government must learn from mistakes in handing out fishing rights
BUSINESS LIVE / 26 AUGUST 2020 - 15:33 / FELIX RATHEB
Department has failed to adjust the transformation imperative to recognise and reward progress
With the forthcoming allocation of fishing rights to commercial fisheries, the government has a unique opportunity to reward broad-based BEE (BBBEE) and preserve jobs — but first it must learn from its mistakes.
This October the department of environment, forestry & fisheries will begin the process of allocating rights to 12 commercial fisheries, among them the hake deep-sea trawl fishery and the small pelagic fishery for sardine and anchovy. These two fisheries are by far SA’s most valuable — between them they contribute at least R10.4bn to the economy annually, employ more than 13,000 people and sustain about 52,000 indirect jobs.
With the allocation of long-term, 15-year rights to these fisheries the pressure is on the department to strike the right balance between giving opportunities to aspirant industrialists and preserving the international competitiveness, jobs and investments of existing rights holders. It can learn valuable lessons from the failed allocation of rights to the hake inshore trawl fishery. Since 2016 the allocation of rights to this fishery has been reviewed by the high court eight times, and 30% of rights in the fishery remain disputed and subject to an appeals process.
When allocating rights to the hake inshore trawl fishery the department dramatically increased the number of right holders from 16 to 37 and reduced the share of the allowable catch allocated to established companies by 30%. This caused large losses for the companies with the assets and experience to add value to the catch and maximise employment. Yet at the commencement of the allocation process these companies were already substantially transformed, with the average black ownership of rights holders estimated to be 82%.
The decision to admit large numbers of new entrants to the hake inshore trawl fishery was taken with the objective of transforming the fishing industry, a campaign that was highly necessary in 1998 when the Marine Living Resources Act (fisheries legislation for the postapartheid era) was passed. What the government has not done adequately over the intervening years is to monitor its own progress and adjust the transformation imperative to recognise, celebrate and reward progress.
A vivid example of this is two of the established companies in the hake inshore trawl fishery that were severely disadvantaged by government’s allocations policy. Company A has held rights in the hake inshore trawl fishery for 30 years. In 1992 it was 100% white-owned, but when it applied for 15-year rights in 2016 it was 84.86% black-owned, employed 486 people in Mossel Bay and was a poster child for BEE, with impressive budgets for training and community development. Despite this company A lost up to 33% of the rights it had held from 2005 to 2016. Only by challenging government’s allocation decisions in the Western Cape High Court was it able to regain some of these rights. Even so, it has lost 19% of its rights to companies with no employees, investments or performance record in the hake inshore trawl fishery.
Company B is also based in Mossel Bay and is 100% black-owned. It secured its first quota in 1999 and when it applied for 15-year fishing rights in 2016 it owned two boats that successfully caught 1,000 tonnes of fish per year — not only its own modest quota, but also the quotas of other small companies. Despite all this it lost 35.45% of its rights. Moreover, its allocation is 33% less than the average allocation made to new rights holders with no employees, investments or experience in the fishing industry.
The Hake Deep-Sea Trawling Industry Association’s analysis of the allocation of rights to the hake inshore trawl fishery suggests that had the department evaluated the government’s success in transforming the fishery and assessed the investments and jobs created by the established operators properly it might have re-evaluated its administrative decision to fundamentally restructure the fishery. For this reason we are encouraged that the department has undertaken to conduct a socioeconomic impact assessment of the hake deep-sea trawl fishery before the start of the allocation process.
The association is hopeful that this will be conducted by reputable economists and will accurately assess the state of transformation and depth of investment and job creation achieved by the fishery. It is only by ensuring that those who are responsible for rights allocation have in-depth knowledge of the fishery that the department can avoid making the same mistakes it made with the hake inshore trawl fishery.
The hake deep-sea trawl fishery I represent has transformed to a similar degree and in comparable ways to the hake inshore trawl fishery. The fishery is a huge employer (7,300 direct jobs and about 29,200 indirect jobs) and its investments in fishing and processing assets top R6.6bn. When allocating rights to the hake deep-sea trawl fishery, the government cannot make the same mistakes as it did with the hake inshore trawl fishery. Taking tonnage away from established operators that are substantially transformed, to allocate it to many small new entrants with no fishing experience will substantially reduce the socioeconomic contribution of the fishery for little or no gain in transformation.
Rights allocation policy must aim to retain international competitiveness and jobs, and support black-owned rights holders that have demonstrably invested and created jobs in the fishing industry.
• Ratheb is chair of the SA Deep-Sea Trawling Industry Association.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER