The economic impact of the hake deep-sea trawl fishery, its transformation since the early 1990s, and the role of small, medium and micro enterprises (SMMEs) in the success of the fishery, are three of the subjects that are analysed in the report “Economic study of the hake deep-sea trawl fishery and the implications for future fishing rights allocations policy” which was released in Cape Town today.
The study was conducted by independent economists Genesis Analytics in 2020, using data from the 2019 fishing year. It is an update and expansion of the original study by Genesis Analytics which was completed in 2018, using data from the 2017 fishing year. The recent study finds that, given its industrial scale, the hake deep-sea trawl fishery makes a substantial economic contribution to local fishing communities along the west coast and between Cape Town and Gqeberha (Port Elizabeth), including those two metropolitan areas. This contribution includes:
- A total socio-economic contribution of R8.5 billion per year to the South African economy.
- Total employment of 12 400, comprising 6 600 direct jobs and approximately 5 800 indirect and induced jobs.
- The total annual wage bill is R1.4 billion, which grows to R.2.3 billion when local economic multiplier effects are considered.
- Sea-going and processing employees earn well above the current national minimum wage – approximately R22 000 and R9 000 per month, respectively.
- The industry spends approximately R3.7 billion with domestic suppliers and this figure grows to R5.9 billion when multiplier effects are taken into account. Of the total spend with domestic suppliers, approximately 59%, or R2.1 billion is directed towards black-owned companies and R382.5 million is spent with black female-owned companies.
- The industry spent more than R664 million with SMMEs in 2019. This expenditure was split across 1 041 different businesses which employ an estimated 4 550 individuals. About 51% of the industry’s spend with SMMEs is directed at black- and female-owned businesses.
- The hake deep-sea trawl industry owns approximately R3.6 billion in vessel assets and R4.0 billion in processing assets and has invested more than R3.8 billion in upgrading these assets since 2005.
- Cape hake is successfully marketed in Europe and the USA, with exports making up just less than two-thirds of all sales and contributing about R2.5 billion in foreign exchange earnings.
On the subject of transformation, the study finds that historically disadvantaged persons (HDIs) currently hold 67% of the shares in the firms which harvest 92% of the hake deep-sea trawl catch, and most likely the same or higher amongst the remaining smaller firms. This has more than doubled from around 30% in 2005. The ownership figure presented in the Genesis Analytics study is aligned with that presented by the Department of Forestry, Fishery and the Environment, which estimates the fishery is 75% black-owned.
The top three firms in the hake deep-sea trawl fishery are all level 1 contributors to broad-based black economic empowerment (B-BBEE) and the industry has moved from an average B-BBEE score of approximately 80 in 2011 to 105 in 2019. Although many smaller companies in the industry do not subscribe to a B-BBEE scorecard, they are all substantially empowered.
HDIs make up approximately 97% of total employment in the industry, and most share in the benefits of the fishery because all the largest companies have broad-based employee share schemes. These schemes have paid out dividends of approximately R440 million since inception.