South African Maritime Safety Authority: Strategic Plan and budget 2008/9

Meeting report

South African Maritime Safety Authority (SAMSA) Strategic plan and budget 2008/9
Mr Lance Manala, Chairperson: SAMSA Board), introduced the new CEO, Mr Tsietsi Mokhele, and the Board Secretary, Mr Bernard Bobison-Opoku.

Mr Tsietsi Mokhele, CEO, SAMSA, briefed the Committee on the challenges currently faced by SAMSA; interventions in place to address the challenges; and the key activities planned for the 2008/2009 financial year. He noted that the mandate of SAMSA was to ensure safety of life and property at sea; to prevent and combat pollution from ships in the maritime environment; and to promote South Africa’s maritime interests. He noted that South Africa, in terms of the ratio of land to sea, had vast maritime interests, and the sea side was becoming very strategic for the unfolding of the environment.

Mr Mokhele outlined the legal mandate and role of SAMSA. He noted that in the past there had not always been full alignment to support government strategies for economic and social development whilst being environmentally and economically sustainable. This had been partially due to the fragmentation of the various sectors – for instance aids to navigation and civil hydography lay with the SA Navy, and pollution management was spread out between many agencies. There had been lack of systems and technologies to track and monitor ships and shipping activities at sea. However, when similar issues were raised at the International Maritime Organisation (IMO) for the first time in 2001, SAMSA started looking at how best it reposition within the industry. Shipping was not limited to vessels, it was also about trade links and supply chains.

The Maritime industry faced numerous challenges. Inadequate attention was given to the maritime industry in general. South Africa had no maritime policy, so that the activities SAMSA engaged in were done in a fashion that sought to advance policy itself, within the overall transport policy. There was lack of support and incentive programmes in key maritime industries and initiatives. The industry was fragmented, with no coherent structures to engage on key issues. The outdated and uncompetitive ship register was a sore point, since only one ship was on the SA register, as opposed to 60 vessels in 1990. There was a chronic shortage of maritime skills, both on and off sea. Lloyds of London were closing down business with South Africa because of lack of skills locally to support that business. There was a lack of technological and innovative support infrastructure to the shipping industry such as e-commerce, track and trace, and ship-to-shore communication.

SAMSA, in addition to these challenges, was limited by a number of its own challenges. There was lack of technological capacity, both to guard the entity internally and to guard their mandate. There was no vessel or identification technology. The recent incident involving the Chinese shipment of arms destined for Zimbabwe was embarrassing, because SAMSA did not have the capacity to monitor and track vessels at sea. IMO was aware that some sea areas could not be policed, and South Africa had been signatory to a Convention that in fact required it to install Long Range Identification and Tracking of Ships (LRIT), up to 1000 nautical miles (1500 kilometres) offshore. This was satellite-based technology, for the purposes both of identification and ensuring non contamination of waters, and to try to check up on meeting of vessels to ensure that vessels were in fact coming from safe and compliant maritime centres. Although currently certain harbours in South Africa did have vessel tracking services, they were only limited to about 70 nautical miles and not the required 1000 nautical miles. The cost of compliance was as yet unknown.

Mr Mokhele detailed other challenges as a lack of e-commerce capacity, licensing issues, now that SAMSA’s mandate was extended also to inland waters, involving around 30 000 additional boats, and its dependence on expatriate labour.

He then explained that SAMSA had now adopted a strategy that it thought was sustainable over the next five to eight years. He outlined the vision and mission (see attached presentation) and said that the key interventions would lie in the areas of new policy, industry organisation, new policies for the ship register, calling for public comments on the Tonnage Tax policy, and encouraging both national and international companies (such as Unicorn or Safmarine) to register vessels in South Africa. Funds had been set aside for the development of a Maritime Skills Strategy and Skills Plan, which it hoped to commission soon, so that a report could be made at the Maritime Awareness Day towards the end of the year.

On the issue of maritime legislation, Mr Mokhele reported that SAMSA had been audited by IMO, which had found non compliance in the length of time taken to effect the necessary amendments to domestic legislation after ratification of Conventions. On LRIT and other areas SAMSA was also found lacking. There was a need to fast-track legislation relating to international instruments. There were about 34 pieces of legislation and amendments in the pipeline. There was a need to reduce the proliferation of agencies and try to coordinate the activities of entities.

Mr Mokhele said that the Committee had previously been concerned that SAMSA was performing below capacity with huge vacancy levels. Interventions had been put in on the human resources (HR) side but he asked that regard not be had to the listed vacancies, as SAMSA was looking again at its future and would align and rationalise its posts. -

In regard to the financial side, Mr Makhele noted that LRIT had not been budgeted for, and it was very expensive. Although SAMSA, in terms of its governing legislation, was permitted to put forward proposals to the Minister it preferred instead to put these first to the Department of Transport (DOT), which showed a considerable shortfall in the level of funding they were receiving. The Inland Waters Regulation that would be in effect on 1 August 2008 was a huge task, expanding across all dams and rivers, adding 30 000 new clients to SAMSA’s business. No provision was made for the cost of compliance, and Hartebeestpoort Dam had issued a report of concern. SAMSA did not have capacity to monitor all that they were supposed to, nor examine and issue provisional licences.

Internal capacity needed to be enhanced. It would be a challenging task to accommodate policies in an environment that had changed so significantly. The Auditor General’s (AG) report might be indicating that certain policies were not in place, but SAMSA was in discussion with the AG on the issue of internal reengineering.

Mr Mokhele then updated the Committee on the key projects for the forthcoming year. This included the Western Indian Ocean Marine Highway (sponsored by World Bank and GEF), which was a regional project of those African countries on the eastern seaboard. Because the eastern seaboard of Africa was a major highway for the very large crude-oil carriers, and because of a low level of reliable navigational danger, IMO, World Bank, and GEF had declared this as a high risk area, which required attention on the safety aspects.  The benefits included more reliance on technology, but that would have to be supported by electronic plans and systems. It would lead to a higher level of visibility than was currently happening. A workshop of the steering committee would be held later in the month, and he invited Members to attend. Other issues included implementation of the expanded regional Search and Rescue programme, four studies to enhance SAMSA’s role as a knowledge centre, a risk assessment on pollution prevention measures, particularly in light of increased exploration of fuels, and improvement of technology systems within SAMSA, including to the financial systems, to enable it to meet the financial reporting obligations. Two operating systems had been installed - the ship registration system in anticipation of attracting more ships on the register, and the Seafarer certification system.

Mr Mokhele indicated that SAMSA would be running eight major centres, including the Centre of Ships (for naval architectural services, survey work); Centre of Seafarers, and Fishing & Inland. Sea Watch would host all the interventions on the sea monitoring and vessel searching side. It would also deal with navigational services, hydrography, aids to navigation, search and rescue, environmental incident reporting and maritime security reporting. This was a coordinating centre that could track the course of ships, provide information of incidents, and provide technology to interpret various patterns. The Centre of Excellence enabled others to access high value added data information, analysed through research and available to assist in planning development and social intervention strategies.

Mr Mokhele gave an overview of the company’s financial resources. He noted that in the previous year SAMSA had shown a deficit of R13 million. SAMSA would need to look at tariff restructuring, especially now it was expanding into the inland waters, against which there was no ability to offset costs. It must improve on the business to raise revenue, improve revenue collection and integrity of the collection processes, and optimise efficiency. There were ongoing discussions with the DOT to seek assistance in determining the monies that should be paid against the services provided. 

Mr Mokhele asked for the portfolio committee’s support in the review and updating of the maritime legislation, in light of the IMO audit results, and in ensuring that the necessary legislation was fast-tracked. SAMSA must also produce a study on the level of compliance with the BEE Charter in maritime spaces. He was not sure what leverage the Committee might have to persuade domestic ship owners to register them in South Africa. The maritime policy would have to address the subsectors of Shipping and Logistics; Offshore; Fishing; Tourism; and Naval. He said that there had been disappointing progress in preparation for the 2010 potential for the maritime sector. There had been strong international capital research in academic studies, training institutions, and hydro capacity research and there was the potential for maritime centres to make an impact on technology, engineering services, business services, legal, and insurance.

Discussion
The Chairperson praised the presentation and the vision for the future.

Mr M Moss (ANC) concurred with the Chairperson that it was the best and most honest report from SAMSA, but he commented that the Committee, although willing to give their support, must be mindful of the fact that there had been no stability over the preceding three years.

Mr Moss was concerned about the lack of skills capacity and technology. He commented that there was a need for a Maritime school, which it had been mentioned might be done, with assistance from a Scandinavian country. However, he was concerned about how to address the low levels of skills, and noted that there was a skills drain.

Mr Moss further noted that South Africa had 2 800 kilometres of coastline and there was no compliance to protect our marine resources. Lack of tracking was a security risk, as seen by developments on the Somalia coastline. He noted that last year there had been an international Maritime Conference in Cape Town, and wondered where to start.

Mr S Mshudulu (ANC) said the presentation gave him a clear picture of how SAMSA should be organised. He was concerned that in the past there may have been over-reliance on the DOT. He asked the Board and new CEO to reflect on the gaps that had become apparent over the years. He asked if there were any sector education and training authorities (SETA) that could assist in dealing with the capacity issue.

Mr Mshudulu noted that if a workshop was needed to unpack the policy issues, then perhaps it should happen. The DOT could assist in making projections for a well functioning unit. Other stakeholders could perhaps also be brought in to add to the research capacity.

Ms N Nkabinde (UDM) also concurred that this was a good report. She noted that inadequate attention had historically been given to the maritime industry. She asked how SAMSA was marketing itself. She agreed that it was vital to have a ships register and asked if there was any indication of the numbers of ships owned by South African companies. She noted that she was concerned with the comments about capacity. She pointed out that in around 2004 the Department of Defence had embarked on a recruitment drive for members of the SA Navy, and she would have thought that people would have moved from there to maritime careers. In addition she noted that there was a need to have more black people in the industry, and that recruitment should be starting with school learners.

Mr Manala dealt with the issue of stability and policy. As Chairman of SAMSA he was equally concerned about the turnover of CEOs in the past, and was pleased that SAMSA had now managed to recruit Mr Tsietsi Mokhele; and fill key positions, which in turn strengthened the governance of SAMSA.

Mr Manala said that this report was more comprehensive than in the past, but pointed out that reports were based on “assumed policy” because of the absence of a guiding document from DOT. The presentation talked to the third mandate of SAMSA; he believed Members were satisfied that SAMSA’s first two mandates had been largely met. He indicated that there was a lack of national policy on maritime matters. This presentation had been a summation, based on experience, as to what SAMSA thought it should do. Their roles were largely delegated. The issue of policy was crucial to give them a very clear sense of their roles and responsibilities.

Also related to policy was the issue of development of the maritime industry and he noted the issue about identification of industries and what leverage SAMSA would have to develop  the maritime industry. Absence of policy created conflict. New members coming on board into organisations would display enthusiasm and SAMSA covered whatever it could, but in doing so was also at risk of butting heads with other institutions. SAMSA believed that LRIT was their responsibility, but this then questioned what the role of the SA Navy was from a security point of view. In an ideal world perhaps SAMSA should also assume the security role, but it had realistically to recognise their capacity, and where it lay. On the issue of the Chinese vessel, three Departments had been phoned, but Department of Foreign Affairs had closed up for the day at 4pm. Proper policy would determine where to go.

The Chairperson pointed out that Department of Public Enterprises was perhaps appropriate. 

Mr Manala noted that security was one aspect. Fishing was also crucial to the maritime industry and this sector would continue to receive a lot of protection from SAMSA.

Mr Manala said, in terms of leverage, that the oil industry was a growing sector but also brought with it a lot of risk.  Many sector activities were located principally in the Department of Minerals and Energy (DME), not DOT, and once again there needed to be clear policy on drilling and licensing.

In relation to the ship registers, Mr Manala said that there must be policy on how to build a ship register, what industries could be called on for support, what leverage could be obtained by SAMSA and other State agencies or departments. In global terms, South Africa was one of the main contributors of tonnage carried on the sea, and derived economic value from that. SAMSA could make commercial arrangements with shop owners, but then the owners of cargo must also be approached as they made decisions on carriage.  Large as the South African exports were, they were not contributing to the development of the South African maritime industry, as there were issues around shipping with local companies. The lack of policy in all these areas was once again a major hindrance.

In relation to the various questions around skills, Mr Manala said that raising awareness had been touched on in four parts of the presentation, and partnerships were crucial. Something would result from the campaigns already identified. SAMSA had been doing work at school levels, and later would be having road shows speaking to targeted schools maritime issues and promoting maritime careers. The Maritime Cluster was a forum of users and beneficiaries of maritime activities. It needed to ensure adequate resources and skills, and put this into the public domain. He said to Mr Moss that there was no need for despondency as SAMSA were already doing what needed to be done. SAMSA had met with Cape Peninsula University of Technology and Durban Institute of Technology, and had also met with Unicorn to understand their activities and constraints, which also revolved around lack of policy. SAMSA itself had no ships and could not undertake the practical training, but was discussing this with DOT to try to establish bilateral relationships that would allow placements on ships. The question was how and who should start the process. SAMSA was expanding its international partners who would be able to take trainees from South Africa. One SAMSA official had recently returned from training abroad as a maritime lawyer, and an architect from Norway joined in January. SAMSA was trying to provide the skills for the future.

Mr Manala said that there were concerns around the LRIT, particularly that no agency had been identified for implementation, no buyers were allocated and nobody seemed to be running with it. SAMSA was discussing this with IMO and DOT, but he asked the Committee to assist in dealing also with other players who may be able to assist.

Mr S Farrow (DA) noted the turbulent seas in which SAMSA operated and hoped that the new CEO would be the oil on the water, as he had for the first time identified the discrepancy between the clear legal mandate and the unsustainable model and budget. The Committee needed, in the short term, to give support in ensuring that the operational loss was covered so that SAMSA would have capital to deal with any unexpected and possible environmental disasters and do the job required of it. Other needs in the medium term were in respect of the IMO and conventions. He pointed out that South Africa was not keeping up with the legislative processes to meet requirements, but that there needed to be funding to cater for shortfalls such as the LRIT. He believed that the DOT should take the lead role, as SAMSA was one of its entities and open up those opportunities mentioned for the maritime industry cluster. This could take care of skills development and opportunity. He suggested that the Committee should mandate the Department of Transport to bring together those role players. He wondered who had handled the registration of the 30 000 small vessels in inland waters before. He commented that to have legislation without having policy was nonsensical, and policy must be clearly formed, even if in retrospect, to delineate responsibilities and authority.

Mr Farrow was interested to hear the need to get ships back on the South African register. This would then also link the shipping operators, which had happened in the past when the Union Castle line operated. He wondered what would be the allied benefits, other than the training opportunities for South African seafarers.

Mr Farrow hoped that the tariffs would somehow be restructured to meet the shortfall, or that other arrangements would be made, as if this was not done, then inspections would not be done in South Africa but at other ports. He asked who determined the tariff.

Mr Farrow referred to the contingent liability mentioned in the Dhlamini and SAMSA case, and asked if the  Auditor General had established what that was, and whether the matter was finalised.

Mr Farrow pointed out that if the Memorandum of Understanding between partners and SAMSA was not signed they would not be able to achieve anything, and this would also have impact on the funding.

The Chairperson pointed out that the mandate of SAMSA was relatively clear, and the key issue lay between the budget and the mandate. Until policy was clarified there was little point in raising issues of staffing and the like. He understood from the DOT that there was a maritime policy now drafted for discussion.

Ms Ayanda Mngadi, Director: Corporate Governance, DOT, clarified the references to lack of policy. She had discussed this with the responsible Departmental person, and had confirmation that within three months the policy would be finalised, including engagement with the public and submission to Cabinet,.

The Chairperson suggested that the opportunity of a public discussion be used in a more imaginative and proactive way to begin a national debate around the centrality of the maritime sector to South Africa and its economy. This should not merely be a passive or technical exercise. The policy should be used to spark and open up debate in the media and other forums.

The Chairperson was less pessimistic than some other members about the issues. Prior to 1994 the maritime sector was neglected, and it had not been a priority since them. Constituency-driven issues such as public transport, fatalities and safety received emphasis, even at DOT, while maritime and aviation issues tended to be marginalized. Now there seemed to be a greater focus on this; suddenly Parliament were seeing IMO matters dating back four or six years. Although it was embarrassing that these matters were so old, the fact that they were being seen was a sign that the maritime sector was on an upward slope.

The Chairperson appreciated the clear statement of what SAMSA wanted of the Committee. Members found it easier to identify their  role if encompassed in a strategic perspective.

The Chairperson asked if it would be possible to get the IMO audit. The Committee only heard last year about negative audits, but were pleased that they had come to light as these effectively motivated the need for policy and perhaps for a significant budget. The audit could become an instrument for lobbying. There were international obligations and expectations on which South Africa was currently falling behind. Parliament had no role in the early formulation of international conventions, but would like to develop capacity to be involved in the loop earlier. The DOT was taking IMO matters more seriously.

The Chairperson commented that the South African Navy was mentioned in the presentation. There must be coordination between the commercial sector and the Navy to steer maritime policy in South Africa. He cited the instance that Greece had recently procured German naval vessels, and noted that some would be built in Germany but the rest in Greece. It was too late for South Africa now to do that, but there should not, in future, be any large SA Navy procurements without examining the industrial policy implications. South Africa had submarines that it was unable to man, and corvettes that were really frigates, and that had not been coordinated within a maritime perspective. Similar issues arose with training; the SA Navy should not just be training for itself but for the maritime needs of South Africa, driven at a Cabinet or National government level.

Mr Farrow, in a follow up question, asked if the SA Navy had its own surveillance that SAMSA could tap in to, with a view to using it for both civil and military, and if this might be a problem. He asked if there were other agencies, and whether aircraft surveillance might be another option.

The Chairperson finally asked for a memorandum on some of the issues from the CEO.

Mr Moss asked whether there was any revenue to be gained from having ships on the register in South Africa and how much that could be. He asked also about the role in Southern African Development Community (SADC) and the African Union (AU).

The Chairperson asked about the regulatory problems.

Mr Manala explained the benefits of the ship register, noting that a professional study had been undertaken and concluded that there were benefits to the industry. There was much unemployment and poverty in coastal communities, which could be alleviated if people from those communities could be employed on ships. The register would not only be linked to ships entering the ports, but there were also issues around ownership. Ships were taxed on the tonnage of the vessel, in general. Tax benefits could attach to the registration. There was also an industrial development aspect. If the ship register and tonnage tax environment could assist ship owners to make a reasonable amount of money for themselves, such owners would not only employ people but also undertake some technical work locally that addressed the issue of skills and unemployment. For instance, business could be provided to a shipyard that otherwise might struggle to survive.

The Chairperson asked for clarification on why ship owners were not registering in South Africa, asking if it was linked to labour issues.

Mr Manala responded that the interests of the global maritime industry were fairly established. Ship owners were attracted by the lowest possible tax. It was possible to give a zero tax rate on vessels, but there must be support of the maritime industry and skills development. Globally there was a shortage of seafarers. South Africa seemed to have lost out – there were few ports and institutions in the country that actually provided maritime training. South Africa must establish better throughput of institutions and eventually qualifications. The answer lay in tax, availability of skills, and what would enhance relationships and get better leverage in training. He pointed out that a challenge in getting people on board was that there was a general despondency as the maritime industry did not feel that it received adequate responses to matters of importance from the State. There was much that the government, State and Committee could do to highlight the benefits of registration.

The Chairperson asked if he meant there was a lack of dynamic encouragement on the part of the Department on these matters, and if this would be assisted by initiatives such as the development of the register and broadening of interest.

Mr Manala agreed, and said that the Memorandum of Understanding must be pursued.

The Chairperson asked at what level in the Department would SAMSA like to interact.

Mr Manala responded that it was his responsibility to receive concerns from the CEO or the Director General level, but would also receive any matters requiring redirection by SAMSA or matters emerging out of Parliament. SAMSA was being asked to do a lot with limited resources.

The Chairperson said that there was now a dedicated DDG in the Department responsible for all entities. He said that everyone in the transport field should reflect on these structural issues, although he pointed out that DOT was covering a huge field and he was not sure it would be able to do justice to every issue, including the maritime sector.

Mr Mokhele took up the issues of the ship register again, stating that there were a number of reasons why countries would want to have ship registers, including the stability it gave to the maritime industry and security of the supply chain that was important to trade links. Many of South Africa’s trading partners were sea borne. A country that was solely dependant on maritime trade, yet did not play a part in the physical movement of cargo between itself and its markets would be highly exposed. Shipping lines that were not registered in South Africa still imposed surcharges on every container handled in South Africa. There were significant security issues around having own capacity to uplift and connect cargo.

Mr Mokhele also added to the comments around skills. There was a huge demand for expertise in view of the role South Africa played globally and regionally. The decimation of skills meant that there was difficulty in filling posts and that people were being head-hunted.

Mr Mokhele added that the linkage of tonnage to registers meant commitment to trade, to provide funding for training and a commitment to provide opportunities for practical experience training to people in the country in which they were resident. More ships meant more use of consumer services in that country, including surveys, inspections, certification, information on the products, and use of legal, insurance, and repair services in that country. These were all additional benefits arising out of including ships on the register, and the registering country would thus be a front-line supplier.

Mr Mokhele referred to the issue of tariffs. SAMSA was not considering a tariff increase, for the simple reason that the SAMSA Act said that any changes had to be submitted to the Minister, and to comply with certain norms as set out in the Act. SAMSA was not being expected to make profits but there was a need to provide mobility to offset costs. There was currently no way of offsetting costs and much of the mandate was not being done because there were insufficient resources.

The Chairperson remarked that the amounts involved were very small.

Mr Mokhele continued that technological information was shared. Information from ships was collected by Maritime Rescue Coordination Centre (MRCC), and SAMSA, passed it on to DOT. However, as rightly pointed out, Departments closed at 4pm. The Department should not be running operations. If there was a need to do something, there was no visibility of the coast. Consideration was being given to security clearance matters and issuing of certificates. He concurred that the Chinese vessel incident had exposed all bodies. Issues of sustainability must be considered. Some of the technologies’ standards had been written and adopted at the world body. LRIT was a standard for receiving and transmitting information written into some design configuration. Some countries of the EU had Automatic Identification System (AIS) long range already, and asked why this could not be used to comply with LRIT.

In regard to the comments on the Memoranda of Understanding, Mr Mokhele noted that year in and year out SAMSA were working with unsigned MOUs, which might finally be signed at the end of the financial year. This did not ensure compliance with standards and instruments. He and the Board were engaging with DOT to come up with an MOU that would include government methodology.

Mr Mokhele said SAMSA would appreciate a focus desk for international conventions, as South Africa should be taking a far more active role to address issues internally before taking a more active role at IMO, in the broad interests of the country. He said he would make the IMO audit available. 

Mr Mokhele then commented on the issues raised with regard to the SA Navy. Two weeks ago SAMSA met with the Head of the S A Navy Hydrographic Office.  because there was a lot of activity on the commercial side. The Maritime Rescue Coordination Centre was not involved in the Navy, because their information was not navy-based. There had been loss of skills and lack of trainees, and there were historic complications in housing a non-defence entity in a defence environment. Mr Mokhele said that South Africa had bought ships that it could neither operate nor man. It was vital that the navy be involved in finding the solution to maritime skills. He noted also that there was a need to engage with dockyards to assess the capacity and size of the yards.
 
Mr Mokhele referred to the Transport Master Planning Process. He conceded that not enough active work in relation to settlements on the coast, as South Africa was behind the rest of the world. Most major cities of the world were coastal cities. Johannesburg was arguably the biggest non-coastal city in the world. Industry was beginning to migrate more and more to the coast, which meant there would be a lot of business between neighbouring harbour towns. Coastal trade was part of the master planning.

Mr Mokhele then responded on the question around the contingent liability as reported on by the Auditor General. The Audit Committee had advised that until the legal matter had been closed provision must be made for the worst-case scenario, and the claim was reflected thus as a contingent liability.

In relation to the prior registration of inland craft, Mr Mokhele noted that this was a difficult issue. The regulations just alluded to registration of boats, and at Hartebeestpoort Dam some people were beginning to mislead communities and charge them for “registering” their boats with a sticker. The regulations did not set out clearly who had the responsibility, and some people had therefore simply set themselves up as registration centres. The DOT had been asked to deal with the matter urgently.

Mr Manala shared the concern about SAMSA’S capacity, and noted that it had a huge task. The question was whether perhaps SAMSA should be positioned to deal with compliance issues and someone else should undertake other tasks.

The meeting was adjourned.