Western Cape objects to a state shipping company

The DA-led Western Cape provincial government has opposed the national government’s bid to establish a shipping company, arguing it would further drain the stretched national fiscus.

Western Cape finance and economic opportunities MEC Mireille Wenger said on Wednesday the province had registered its objections to the SA Shipping Company Bill after the national transport department called for public comment.

“This bill is oblivious to the reality that South Africa has no shortage of failing SOEs [state owned enterprises], continuing to extract money needed for life-saving and life-changing services.

“It also seems blind to the hard fact that we face a budget crunch in SA, with a lot less money to deliver critical services to our people,” she said.

The state is pushing to establish the shipping company, saying it is necessary to reduce reliance on foreign firms and shield the country from supply disruptions.

The drive comes as calls for the privatisation of SA’s struggling SOEs mount — most notably Eskom, which is struggling to keep the lights on and relies on government bailouts to stay afloat.

A draft of the bill published by the national department of transport in November, notes that SA is the only member of the Brics group — Brazil, Russia, India, China and SA — that does not have state-owned vessels.

“In fact, in the national government’s medium-term budget policy statement, we heard how R30bn would be redirected to struggling SOEs this year alone. We know that between 2017/2018 and 2020/2021, SOEs made losses amounting to an astounding R119.8bn, based on the national consolidated financial statements. Establishing yet another SOE is not the answer,” Wenger said.

Instead, the government should ensure that the country’s ports are efficient and equipped with the necessary infrastructure to boost trade, she added.

“To do this, we need greater levels of private sector participation. While we welcome that this is being pursued at the ports of Durban and Ngqura, we are concerned that the Port of Cape Town, which is an excellent candidate, has been excluded.”

SA exported goods valued at more than $100bn in 2021, while imports amounted to about $70bn.

MARINE TRANSPORT

According to XA International Trade Advisors, marine transport is the main driver of SA trade, accounting for 80%-90% of the total.

Clive Vinti, an associate at XA International Trade Advisors, recently stated that establishing a state shipping company would be an “awful” idea because it was likely to require government support to operate in a competitive market .

“Aside from the horror that is any state-owned enterprise, it is not clear why anyone would choose to use this shipping line to move their cargo,” Vinti added.

Transport minister Fikile Mbalula has said the establishment of a national shipping carrier would be vital to “building strategic national shipping capacity and capability”.