Economic Opportunities in South Africa's Oceans

This article examines how South Africa’s 2,850 km coastline, bathed by the Benguela and Agulhas currents, underpins rich biodiversity within an EEZ of over one million km²; explores offshore oil and gas prospects, government equity stakes and the draft gas master plan; assesses maritime law enforcement efforts to curb illegal fishing; and evaluates Operation Phakisa’s multi-sector blueprint for sustainable growth in fisheries, aquaculture, marine transport, coastal tourism and energy.

Geography

South Africa is bounded by the Southern Atlantic ocean to the West of the region and the

Indian Ocean to the East. The cool Benguela current courses due north on the Atlantic side

while the warm Agulhas current flows southwards on the Indian side. The Agulhas current is

named for Cabo Agulhas, the Cape of Needles, a moniker given to the Cape Peninsula by

early Portuguese explorers who saw the resemblance in the long pointed rocks they found

there. The most important port in the country is the port of Durban on the eastern seaboard,

followed by the Cape Town port.

Over 12000 marine animal species are found in Southern African waters. Coastal and

estuarine ecosystems form a large portion of the total number of ecosystems (about 130) in

the country despite accounting for only about 4% of the land area.

With a coastline stretching 2,850 kilometers, and an exclusive economic zone (EEZ) which

stretches 200 nautical miles, or 370 km, off the coast of the country, the South African ocean

economy encompasses an enormous area in addition to its exceptional biodiversity.

Offshore Prospects

In recent years, the Brulpadda field and Luiperd fields were discovered off the coast of the

Western Cape province of South Africa. The offshore seismic surveying which was used a

number of years after these discoveries caused significant controversy and protest action

due to the likely harmful effects on marine biodiversity in the 24 000 km2 area, called the

South Outeniqua Basin.

The SA government intends to take a 20% stake in all new oil and gas ventures and to

reserve the right to to purchase an additional 30% stake at market-related rates - as

revealed in planned amendments to the 2002 Mineral and Petroleum Resources

Development Act.

Question marks are in order over the government’s approach despite last year’s withdrawal

by the French energy giant along with its Qatari and Canadian partners, and the potential

energy windfall for a country where mining and manufacturing require vast amounts of

electricity. Untold numbers of small and medium enterprises (SMEs) have also floundered in

recent years due to the economic shocks of power supply interruptions.

According to the 2024 article by Andrew Pitt at Moore, South Africa’s natural gas demand is

currently around 393 petajoules per annum (PJ/a), with only approximately 190 PJ/a being

supplied and an increase in demand projected by the Industrial Gas User’s Association of

South Africa (IGUA-SA) as well as the Integrated Resource Plan (a government white paper

aimed at projecting electricity demand holistically). About 7220 MW of gas-powered

generation capacity is expected to come online by 2030. Shortages of gas are expected to

adversely affect industries employing roughly 70000 people, 8000 households and many

hospitals and SMEs in the same time frame.

The SA government released the draft gas masterplan was released in April 2024. While the

draft lays out five sensible objectives, it has come under criticism for not addressing the

short-term requirements to avoid the pending shortage or detail the roadmap for financing.

The recent transfer of gas related legislation and responsibility to the Ministry of Electricity

and Energy may unlock more policy certainty in the country, which will be essential for any

long-term offshore gas project.

Enforcement of Maritime Law

South Africa’s enforcement of its sovereignty over its EEZ is a critical aspect of its national

security, economic interests, and international obligations. The EEZ, which extends 200

nautical miles from South Africa's coast, is an area where the country has exclusive rights to

explore, exploit, conserve, and manage natural resources, both living and non-living, in the

water column and seabed. To assert its sovereignty, South Africa deploys various agencies,

such as the South African Navy, the South African Maritime Safety Authority (SAMSA), and

the South African Police Service’s (SAPS) specialized maritime units. These agencies work

together to patrol, monitor, and protect South Africa’s maritime resources, combat illegal,

unreported, and unregulated (IUU) fishing, and prevent unauthorized foreign exploitation of

the country's resources.

South Africa’s failure to effectively address illegal trawling within its Exclusive Economic

Zone (EEZ) is severely hindering the country’s economic development, particularly in terms

of its oceans economy strategy under Operation Phakisa. Despite the DFFE having been

repeatedly notified about IUU fishing activities, especially along the Wild Coast - the authorities have faced criticism for not taking decisive action. These illegal operations, often

linked to foreign interests, notably Chinese-run trawlers, are exploiting marine resources that

are crucial for South Africa’s fishing industry. Species such as sardines and shad, which are

vital to both local communities and the broader fishing economy, are at risk due to these

unlawful practices.

The economic impacts of this failure are profound. Illegal fishing activities are costing South

Africa billions in lost revenue each year. Estimates suggest the country is losing up to R12.2

billion annually due to IUU fishing, a figure that reflects not just financial losses but also the

long-term damage to the sustainability of its fisheries. As the country’s marine resources are

plundered, the legal, regulated fishing industry faces increasing strain, which leads to

reduced economic opportunities, particularly in coastal regions reliant on sustainable fishing.

This hampers South Africa's efforts to leverage its oceans economy potential, and

undermines the goals of Operation Phakisa (which we touch on below) to unlock sustainable

growth through the responsible use of its maritime resources. While South Africa’s legal

framework offers robust protection for its marine resources, the failure to enforce these laws

continues to stifle progress, depriving the nation of both economic and environmental

benefits.

Blue Horizon

Operation Phakisa is a government-led initiative designed to unlock South Africa’s oceans

economy and contribute to long-term economic development by harnessing the country's

vast maritime resources. Launched in 2014, Phakisa focuses on accelerating growth in key

sectors such as fisheries, aquaculture, marine transport, offshore oil and gas exploration,

and coastal tourism. By improving infrastructure, creating jobs, and enhancing sustainable

practices, the initiative seeks to expand South Africa’s so-called "blue economy", which is

projected to create 1 million jobs in the country and bolster GDP by R177 billion by 2033.

The program aims to develop coastal regions, improve governance and regulatory

frameworks, and attract investment, while ensuring the sustainable use of marine resources.

Through collaborative efforts between government, industry, and local communities,

Operation Phakisa stated aim is to position South Africa as a global leader in the sustainable

development of its oceans economy, creating opportunities for economic diversification and

regional development.

According to a report authored by the Carbon Trust together with the British High

Commission in Pretoria, which delved into the outlook on the so-called blue economy for six

Southern African countries, the aquaculture industry was identified as having the broadest

and greatest potential for growth across numerous geographies, including South Africa. Yet

concerns have been raised about the potential impact of these operations on freshwater

supplies, a major issue which the country has been grappling with largely due to municipal

mismanagement of infrastructure combined with extreme heat events. It may be beneficial to

emphasize a specific kind of aquaculture, called mariculture, which requires only the sea and

can also be applied in a way that restores coastal ecosystems, in order to avert these

challenges.

Painting a picture of the future of South Africa’s ocean economy requires many layers of

analysis, due both to the natural complexity of the oceans and coastal areas as well as the

many competing interests of different stakeholders and the regulatory landscape. In a multipolar world with raging conflicts in the Middle East, it is more than plausible that ports

such as Simon’s Town near Cape Town may even become crucial anchor points for

Indo-Pacific trade, which accounts for about half of all commodity trade globally. Whatever

direction the ocean economy takes, diversification, broad participation in conservation,

public-private co-operation, a strong rule of law and the country’s readiness for investment

will be vital in its success.