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TOO OFTEN we’ve heard about the perils of black economic empowerment in South Africa, often accused of benefiting only a select few – who generally have ties with the ruling African National Congress. Arguably the most transformed industry in the country, it seems the fishing industry has become the Cinderella of empowerment, with the mining and ICT industries being the ugly step-sisters. The fishing industry has emerged from being 99% white-owned and -controlled – with the top five companies controlling 92% of the total allowable catch in pre-democratic South Africa – to having small and large-scale fishing companies being 60% black-owned and controlled by 2005.
Paramount to the progress made was the combination of the introduction of the Marine Living Resources Act (Act No 18 of 1998) and the active participation of (among others) Sekunjalo and Brimstone – currently the biggest players in the empowerment sector in SA’s fishing industry.
The objective of the Act was to “restructure the fishing industry to address historical imbalances and to achieve equity within all branches of the fishing industry”. Outlined in the Act, the focus of restructuring was directed towards fishing rights allocation processes “whereby fishing quotas were redistributed away from historically white, larger companies, to smaller, mostly black, entrants into the industry”.
The Act had initially made provision for yearly rollovers of quotas, but that proved cumbersome for both the smaller black fishing entrepreneurs – who were unable to provide the security needed to raise capital to fund their businesses – and the larger players, who were operating in an uncertain environment as a result.
In an attempt to address that limitation, Horst Kleinschmidt, former deputy director-general in the Marine Coastal Management branch of the Department of Environmental Affairs & Tourism, reviewed the policy and took a strategic decision to offer fishing rights that were rolled out over longer periods of time, set at a minimum of four years (medium term). This not only ensured fishing rights stayed in the right hands but stayed there for longer, making empowerment in the industry more sustainable. This decision marked a big step forward for black economic empowerment in the industry.
Analysts have also attributed the empowerment progress in fishing to the hands-on approach adopted by JSE-listed empowerment groups Sekunjalo Investments and Brimstone Investment Corporation to the partnerships they have entered into to further both their investment and empowerment objectives.
Sekunjalo, now ranked the most empowered company in the fishing industry, joined Premier Fishing in 1997 as an empowerment partner in an attempt to create a platform for meaningful economic participation by black South Africans in the Industry. Successfully so. Currently 80% owned by Sekunjalo, Premier is ranked the largest black-owned company in fishing, boasting numerous joint ventures with small and medium-scale participants in the industry.
Similarly, Brimstone – through its 56,9% interest in Sea Harvest – led the industry’s largest empowerment deal worth R541 million through a consortium that included Kagiso Ventures, Sea Harvest key management executives and an incorporating trust. It also holds a 10% interest in Oceana Group, which recently allotted 10% of the company’s share issue to qualifying employees.
Although fundamentally successful, the model adopted by the fishing industry isn’t without limitations: the most contentious of which remains the issue about the rights transfer policy, which stipulates that for a rights holder to be able to sell/transfer his rights to a third party the third party needs to have an equal empowerment status as the holder of the rights. So the policy ensures a 100% black-owned entity can only sell/transfer to a third party with 100% black ownership.
The intention behind this policy implementation was to ensure transformation wasn’t diluted. That’s become a big issue for the big companies, which despite having a good empowerment status are excluded from business with entities with a higher empowerment status.
Due to the recent economic crisis, many black-owned small-scale fishermen and entities were unable to absorb the financial shock due to depressed demand and were forced out of business. Had the transfer policy been more flexible, they could have potentially started joint ventures with the bigger companies, which were more able to handle and absorb those shocks. Relaxation of the transfer policy would also not come without some shortfalls. So, as the old saying goes: “A bird in the hand is worth two in the bush”. And the one we have in our hand is a sure treasure. Aluta continua.
Paramount to the progress made was the combination of the introduction of the Marine Living Resources Act (Act No 18 of 1998) and the active participation of (among others) Sekunjalo and Brimstone – currently the biggest players in the empowerment sector in SA’s fishing industry.
The objective of the Act was to “restructure the fishing industry to address historical imbalances and to achieve equity within all branches of the fishing industry”. Outlined in the Act, the focus of restructuring was directed towards fishing rights allocation processes “whereby fishing quotas were redistributed away from historically white, larger companies, to smaller, mostly black, entrants into the industry”.
The Act had initially made provision for yearly rollovers of quotas, but that proved cumbersome for both the smaller black fishing entrepreneurs – who were unable to provide the security needed to raise capital to fund their businesses – and the larger players, who were operating in an uncertain environment as a result.
In an attempt to address that limitation, Horst Kleinschmidt, former deputy director-general in the Marine Coastal Management branch of the Department of Environmental Affairs & Tourism, reviewed the policy and took a strategic decision to offer fishing rights that were rolled out over longer periods of time, set at a minimum of four years (medium term). This not only ensured fishing rights stayed in the right hands but stayed there for longer, making empowerment in the industry more sustainable. This decision marked a big step forward for black economic empowerment in the industry.
Analysts have also attributed the empowerment progress in fishing to the hands-on approach adopted by JSE-listed empowerment groups Sekunjalo Investments and Brimstone Investment Corporation to the partnerships they have entered into to further both their investment and empowerment objectives.
Sekunjalo, now ranked the most empowered company in the fishing industry, joined Premier Fishing in 1997 as an empowerment partner in an attempt to create a platform for meaningful economic participation by black South Africans in the Industry. Successfully so. Currently 80% owned by Sekunjalo, Premier is ranked the largest black-owned company in fishing, boasting numerous joint ventures with small and medium-scale participants in the industry.
Similarly, Brimstone – through its 56,9% interest in Sea Harvest – led the industry’s largest empowerment deal worth R541 million through a consortium that included Kagiso Ventures, Sea Harvest key management executives and an incorporating trust. It also holds a 10% interest in Oceana Group, which recently allotted 10% of the company’s share issue to qualifying employees.
Although fundamentally successful, the model adopted by the fishing industry isn’t without limitations: the most contentious of which remains the issue about the rights transfer policy, which stipulates that for a rights holder to be able to sell/transfer his rights to a third party the third party needs to have an equal empowerment status as the holder of the rights. So the policy ensures a 100% black-owned entity can only sell/transfer to a third party with 100% black ownership.
The intention behind this policy implementation was to ensure transformation wasn’t diluted. That’s become a big issue for the big companies, which despite having a good empowerment status are excluded from business with entities with a higher empowerment status.
Due to the recent economic crisis, many black-owned small-scale fishermen and entities were unable to absorb the financial shock due to depressed demand and were forced out of business. Had the transfer policy been more flexible, they could have potentially started joint ventures with the bigger companies, which were more able to handle and absorb those shocks. Relaxation of the transfer policy would also not come without some shortfalls. So, as the old saying goes: “A bird in the hand is worth two in the bush”. And the one we have in our hand is a sure treasure. Aluta continua.
