Barry Streek meets the man in charge of changing the face of the fishing industry
Horst Kleinschmidt, the head of South Africa’s Marine Coastal Management, faces a difficult challenge: he has the final say over which of the 6 000 to 9 000 applicants will be awarded the 1 200 valuable fishing quotas.
Kleinschmidt is obliged by law to make his decision on the basis of equity, transformation and empowerment, the sustainability of the fishing industry and the maintenance of marine resources in a sector that historically has been marked by controversy, mismanagement, over-fishing, poaching and corruption.
Kleinschmidt has a committed staff, a highly sophisticated computer system and detailed application forms, but the buck stops with him.
A former student activist and former head of the Defence and Aid Fund and now a deputy director general in the Department of Environmental Affairs and Tourism, Kleinschmidt says transparency is one of the hallmarks of the new system.
“It is to build the institutional capacity that patently wasn’t here before. What I am trying to achieve is to regain legitimacy for this department that it so patently lost when it was fair game for anyone to shoot at it. If we can have credible institutional capacity, if we have transparency, if the process is just and equitable those are the hallmarks of what the department needs.”
The whole exercise rests on three pillars and the one Kleinschmidt is most concerned about is resource management. “How much fish goes to who, when, where, what is the administrative regime that encompasses that.
“The precursor to that is that you have adequate science that knows how much fish there are to be able to make an assessment of the quantum because you if don’t manage that carefully you lose it for the future,” says Kleinschmidt. “That is the way it has gone in so many countries. There is absolutely zilch left. So the argument about having resource management only arises if you look at the quantum as a finite amount, you assess it and decide how to manage it.
“This hinges on a third premise that you need to have a compliance regime in place. You need to be able to detect those guys who steal because there is no point in going through this elaborate machinery, with a rights allocation regime if, like in abalone, 50% of the stuff is stolen anyway.”
Kleinschmidt says he is troubled by the “daunting” number of applications received. Last year, when he had to adjudicate 438 applications for hake longline permits, it took him three months to complete the task.
“I realised that if we go forward with this, what can I do to prevent a repeat? Various things are in place.
“First of all, the need to have a substantial application form is not least premised on the basis that if you have more information then you can also test more data and therefore have a more rational basis on which you include or exclude somebody.
“This questionnaire is substantially a vehicle through which you can say, ‘Do you know what you are doing? Are you a serious contender?’ I make no apologies for the length of it because, in the end, the value of a right is between a couple of hundred thousand rand and a couple of million rand. Anyone who has so much money needs to run a business and if they run a business they should damn well know how to fill in a form like this. They should have been able to think through these things. This is not a charity. It is not a poverty relief programme.”
Kleinschmidt said this is about “serious empowerment” and this means that ownership and management of the industry has to reflect the demographics of South Africa better than it has done in the past.
At management levels the fishing industry remained largely white, but a recent Rhodes University study of two-thirds of the fishing companies found the professional sector was now 50% black and 50% white.
“At the end of the day I want to emphasise strongly that it is about black people becoming a permanent feature in the fishing industry as owners and managers, rather than doling out little shares to hundreds of CCs owned by a crew who don’t own a boat, who don’t know what it means to run a company, who don’t know how to market, who don’t know how to process, who walk down the road to the next big fishing company and sell all those competencies on to somebody and who then probably gets into trouble because they didn’t pay tax or they didn’t pay VAT.
“As one white fishing manager said to me, we will do what we did in Namibia. We will just wait and when they get into trouble we will buy them out. I need to avoid that, and that means I must understand who of the black applicants is a viable party as a business entity to build a stronger fishing sector.”
Some structures had been put in place to oversee the transfer of companies and quotas, but he wants to get to a situation where normal trading can take place. But this should only take place if it promoted transformation.
“I am talking to some black entities at the moment which are actually buying up white companies and that shows you that the muscle of black entrepreneurship is beginning to show a little bit of energy in the fishing sector. That’s very exciting.”
Kleinschmidt will need to make sense of a lot of competing issues in adjudicating the applications, including the management of resources and transformation.
He will be looking at business plans, vessel plans and catch plans, which should not, as in the past, merely benefit the white companies.
“I want to look at the black guy who has a catch plan that is thought out, where he argues his corner. And if he can’t argue his corner, I am sorry to say he is not in the game, because he is going to fall through the cracks sooner or later.”
If someone was patently heading for bankruptcy or failure, he would be defeating empowerment rather than advancing it.
Would this mean some of the larger companies will lose the rights they have held? “I have learnt in all of this that one size does not fit all and you have to look at it sector by sector. In the capital-intensive industry you find the big companies but this where a vessel, for example, costs R40-million to R50-million rand, and where to have a European Union-approved clean processing factory you have to spend millions on it before you are there,” says Kleinschmidt. “In those sectors we are emphasising transformation within those companies because one other consideration must be that you can’t work towards the fragmentation of the fishing industry when it is broken down into tiny units.”
He has already been told by a number of Australian and New Zealand companies that they would buy up the South African fishing industry when it had been broken up and South Africa would not then have a fishing industry. Trade unions were also concerned about the loss of jobs in processing if the industry were broken up.
It has made his job more difficult and complicated because some sectors are unsuitable for small and medium enterprise or even as micro enterprises.
However, the one-year rights system had created uncertainty and the industry had not invested in renewable or improved technology.
“Four years is hopefully creating a bit a bridge for that, but that’s not enough. At least we are getting back to a situation where we have balanced stability and transformation as issues, because if you don’t invest in this industry and if you have antiquated vessels and antiquated processing, it is all going to work to the detriment of our overall economic objectives as well.”
In the case of West Coast rock lobster and abalone, as well as other lesser-value quotas, it had been possible to micro-scale participation in the commercial sector and a R500 category had been created in which fewer questions were asked in the application form.
“We have basically shut down the subsistence facility in those two high-value sectors. That is with a very important social view in mind, namely that you don’t condemn people to the poverty trap of subsistence.
“You are in a poverty trap, you can only get your four crayfish and you don’t get the full value for them anyway because of the patrimonial relationship you are in with the big company.”
With a 1,5-ton West Coast rock lobster permit, they could enter a sales agreement with a bigger company but they should not be beholden to them if they proved themselves to be competent business people. In four years they could go for a bigger-scale operation or they could collaborate with others.
“That is changing economic relationships up the West Coast, I think quite significantly. Instead of people of colour being condemned to being the employees of course there will still be employees in the white companies you now have people who can sell and can use their bakkie [small fishing boat] and with a minimum outlay of capital can actually get on that economic ladder quite creatively. I hope very much that this will mean very different income streams in the historically disadvantaged communities.
“We have to sift out who the real entrepreneurs are and they will in turn become employers, but the idea that the government owes everybody a quota is sheer nonsense.”
Kleinschmidt says about the process so far: ” Well, I think we are up to it. What worried me most was whether we could stick to the timetable for all sectors and, touch wood, up to this moment we haven’t had any slippage at all. Everything is in place.
“So, it has been quite a difficult thing but I feel cautiously optimistic that we are on top of it.”