A Q&A with Zukiswa Kimani, DTIC chief director of industrial policy
The DTIC is funding research into the boatbuilding value chain and supply chain. Is the hope that this could inform future funding / support mechanisms?
Over the years data and information on the sector has been a challenge to get and thus makes it difficult to formulate policies and interventions for the sector. Therefore, we deemed it important to create a way to update trends in the industry. The information collated could provide a basis for advocating support for the industry and developing a support mechanism for the sector.
Does this research link in with the broader goals of Operation Phakisa and growing the Blue Economy?
Yes, it does as one of the work streams in the Operation Phakisa focus on marine manufacturing which falls under the mandate of the dtic. Under the work stream Marine Transport and Manufacturing (MTM) the dtic is responsible for creating and developing a market for the sector. The localisation programme is one of the key interventions under Operation Phakisa that the Department is working on including marketing the sector through outward selling/buying missions.
DTIC has worked closely with stakeholders such as SABBEX and SAIMI. Has this been a fruitful relationship?
Yes, dtic has had good relations with both SABBEX and SAIMI over time. The interactions have led to the development of a programme to assist the development of the sector. For example, they led to the development among others of the Marine Manufacturing Development Programme (MMDP), the Skills Development Programme and the Inward Buying Mission to name a few.
The Department has intervened previously to help the sector. What stands out for you? Are there any particular projects / programmes / dialogues that you’d like to highlight?
Through collaboration between industry, the Department and IDC, a funding mechanism was established called the Stockboat Programme. This was the first time the sector received its own tailor-made support. However, despite this, take up from industry was not as it was anticipated in its conceptualisation. We have also supported the sector through SASS funding over the years to exhibit their yachts and products in various exhitions across the world.
The designation of working vessels for local procurement, is one of the highlights of our programmes. Through this programme big tenders which were previously directed to international companies for fully manufactured import of vessels, have been awarded to local manufacturers including tenders advertised by Armcor e.g. Project Hotels and Project Biro. There were some TNPA tenders that has been awarded to the local shipbuilders as well. Tenders be it big or small are continuing to be advertised and the local companies are benefiting from this.
At the back of designating the sector at a 60% local content, the dtic collaborated with CSIR to establish a fund that could assist local companies with obtaining the necessary standards and accreditation as the cost of certifications can be prohibitive.
Boat builders /brokers are not shy to request help when it comes to issues around tariffs / duties etc. Sometimes there are competing demands. What are some of the key concerns raised by builders/suppliers/brokers?
Our focus is on boat builders and not on brokers. Some of the challenges raised by the boat builders includes:
- Access to finance is very limited for working capital for the industry,
- The nature of lease agreements with TNPA,
- Lack of available berths and inadequate mooring infrastructure have become an impairment for the launching of vessels,
- The fluctuation of exchange rate,
- Shortage of skilled labour and in highly specialised skills are very scarce coupled with an aging workforce with an average age of 55.
Some of these are currently being addressed through the various initiatives of Operation Phakisa.
Manufacturing is a complex and sometimes frustrating terrain in SA. But there is general consensus that the potential is huge, in boatbuilding and beyond. Would you agree that SA has a valuable boatbuilding brand that could generate thousands of new jobs?
Yes, the rationale behind the dtic’s support for the industry is the potential for growth and job creation of the industry. The potential is not only for the Boatbuilding industry but it creates spill-over effect down the value chain and creates important multipliers in the economy.
There is a lot of talk of Cape Town trying to attract a bigger share of the superyacht market, which could have a ripple effect for ship repair / suppliers. Is this a potential new revenue stream? What can government do to assist / create an enabling environment?
We do recognise that ship repairs and maintenance is one of the biggest job creators in the boatbuilding industry. This is why the MMDP considers ship repair as an important industry to create the additional jobs needed.
TNPA and tariffs is sometimes cited as a challenging factor, particularly in Cape Town. Is the Department engaging TNPA with a view to creating an enabling environment?
TNPA does not fall under the mandate of the dtic. However, the dtic continuously engages TNPA and advocates for favourable tariffs in support the industrialisation objectives of government.
What about transformation within the sector? Is enough being done? Are there positive signals /momentum in this regard?
The transformation agenda of the boatbuilding industry in South Africa is not moving at an encouraging pace. The commitment of players in the industry is needed to achieve an acceptable level of transformation in the industry.