maritime business seminar on 24.11.2016_african market

A PERSPECTIVE ON PROJECTED LOCAL MARKET AND AFRICA’S

VESSEL REQUIREMENTS

GREG DAVIDSof

USG ADVISORY SERVICES, SOUTH AFRICA

BY

MARITIME BUSINESS OPPORTUNITIES DAY, HELSINKI 24 NOVEMBER 2016

AFRICA: MACRO OVERVIEW Number of Countries: 53Population: 1,166 billion (2015)Middle class population: 313 million (fastest growing)Working class population: 500 millionMade up of 5 Regions: North Africa, East Africa, West Africa, Southern Africa and Central Africa

Number of Ports in Africa: 421 (small, medium and major included)

GDP: $5.486 trillion (2014).

Total Exports: USD 552 billion (2014)

Total Imports: USD 616,8 billion (2014)

Growth Forecast

Sub-Saharan Africa’s economy looks to a grow with a

solid 4.5-5.5 % from 2015 to 2020. However, this is on

the lower spectrum due to the recent sharp decline in

the oil market prices.


Macro-Economics

According to IMF, 7 out of 10 fastest growing economies are in Africa.

The average GDP growth is above 5% annually driven by factors as:

Demographic growth.

Natural resources.

Public investments into infrastructure expansions.

Presence of foreign countries and companies as customer and investors.

Key drivers for the local maritime market

Oil and Gas exploration.

Infrastructures developments in ports and terminals.

Fleet renewals (Navy, Coast Guard, Fishing etc).

GROWTH AND KEY DRIVERS


The continent has a young population with agrowing labour force – a highly valuable asset inan ageing world.

Africa is still urbanizing and much of theeconomic benefit lies ahead.

Companies need to gather detailed marketintelligence on where the most promisingconsumer markets are.

African economies are well positioned to benefitfrom rapidly accelerating technological changethat can unlock growth and leapfrog thelimitations and costs of physical infrastructure inimportant areas of the economy.

East Africa is already a global leader in mobilepayments.

Reinforcing the positive outlook for growth is acontinuing rise in infrastructure investment.

TRENDS FOR AFRICA’S FUTURE

In 2034, Africa is expected to have the world’slargest working-age population of 1.1 billion.

21 million new stable (formal, wage-paying)jobs over the past five years and 53 million jobsover the past 15 years.

Stable jobs grew at a rate of 3.8% between2000 and 2015, 1% faster than growth in thelabour force.

Africa’s consumers will spend $2 trillion by2025.

75 cities accounted for 44% of totalconsumption in 2015.

Penetration of smart phones is expected to hitat least the 50% mark in 2020.

Source: World Economic Forum 2016


KEY FACTS OF AFRICAN MARITIME

• Tugs, cargo vessels and offshore units have been ordered

from African shipyards since 2010.

• Egypt delivered 203 vessels (mostly tugs) between 2010 and

2015.

• Egyptian Timsah S.Y has the largest fleet of 62 vessels (56 in

operation and 6 under construction).

• The majority of the African vessels delivered to Egyptian and

South African owners.

• The largest OB (9 tugs) in 2015 held by Southern African

shipyards.

• Transnet has the largest OB at African shipyards (9 tugs).

• Rescue and salvage vessels form the largest portion of all

types of vessels that have been produced in African

countries.

Egypt

60 %

South Africa

25 %

Angola

5 %

Nigeria

5 %Other

5 %

Builder countries

Contains

many small

vessel

typically

with

high-speed

engines

and small

FPPs

0

5

10

15

20

200

0

200

1

200

2

200

3

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

# o

f ve

sse

ls

Contracting for African builders

Ferries General cargo Mobile drilling

Mooring Other cargo PSV/Supply

Rescue & Salvage Ro-Ro Specials

Tankers


AGE PROFILES OF AFRICAN OWNED VESSELS

Source: Clarkson

• Offshore vessels in general +30 years old although newer PSV/supply vessels also in fleet

• A large proportion of tugs above 30 years old

0

5

10

15

20

25

30

0 4 8

12

16

20

24

28

32

36

40

44

48

52

56

60

64

72

89

Tugs

0

5

10

15

20

25

30

35

0 2 4 6 8

13

17

19

22

28

30

32

34

36

38

40

42

44

46

50

AHTS

0

2

4

6

8

10

12

14

16

18

0 2 4 6

12

14

16

18

21

24

26

29

31

33

35

37

39

41

43

46

49

PSV/Supply

0

2

4

6

8

10

12

14

3 9

13

22

28

31

34

38

41

44

47

50

53

57

60

65

100

General cargo

0

5

10

15

20

25

1 4 7

10

13

16

19

22

25

28

31

34

37

40

43

46

49

52

55

71

Tankers

0

1

2

3

4

5

6

7

8

9

10

0 3 6 9

12

15

18

21

25

28

31

35

39

42

46

49

52

58

Ferries


THE SOUTH AFRICAN FISHING INDUSTRY VESSEL AGE PROFILE

Sector No vessels Average vessel years

SCRL 7 60

WCRL (offshore) 405 33

KZN prawn trawl 8 40

Hake longline 75 33

Horse mackerel 5 32

Large pelagic 16 31

Tuna pole 128 31

Patagonian toothfish 2 29

Small pelagic 57 29

Hake inshore trawl 18 26

Hake deepsea trawl 60 26

Dermesal shark 4 20

Abalone 86 18

Squid 125 15

WCRL (nearshore) 314 16

Hake handline 74 15

Linefish 312 15

Net fisheries 68 15

KZN sardine beach seine 18 13

TOTAL ACTIVE VESSELS = 1 445


FLEET COMPOSITION

0 50 100 150 200 250

Mauritius

Tunisia

Tanzania

Morocco

Angola

Libya

Algeria

South Africa

Egypt

Nigeria

Bulkers

Containerships

Ferries

LNG

LPG

Offshore

Other Merchant

Ro-Ro

Specials

Tankers

Source: Clarkson


SHIP BUILDERS IN AFRICA

Egypt

48 %

South Africa

15 %

Unknown

10 %

United States

4 %

Nigeria

3 %

Other

20 %

Owner countries

0 10 20 30 40 50 60 70

Suez Canal

Sorefame

Egyptian S.B.

Arab Contr.

Canal Naval

Southern African

Port Said Eng. Wrks.

Dorbyl Marine

Alexandria S.Y.

Timsah S.B.

Top 10 builders

Fleet Orderbook

0 10 20 30 40 50 60

Egyptian Govt.

Egyptian Marine

Timsah S.B. Co

Bourbon

Alexandria Port

Egypt Govt Maritime

Portnet Dredging

Transnet

Unknown

Suez Canal Authority

Top 10 owners

Fleet Orderbook

Source: ClarksonMARITIME BUSINESS OPPORTUNITIES DAY, HELSINKI 24 NOVEMBER 2016

INVESTING IN BLUE


OVERVIEW OF OPERATION PHAKISA

• Unlocking the Economic Potential of South Africa’s Oceans by focusing on four priority potential growth areas:• Marine transport and manufacturing.• Offshore oil and gas exploration.• Aquaculture and marine protection services and • Ocean governance.

• Represents a fundamental change in how we accelerate delivery – it is the first of many ‘business unusual’ initiatives that government will implement.

• Expected to increase the Ocean Economy’s GDP contribution by >R20 billion, and lead to the creation of 22 000 direct new jobs by 2019.

• Delivery of these initiatives are supported by multiple leaders including the President and Cabinet, the Minister in the Presidency, Department of Planning, Monitoring and Evaluation’s Operation Phakisa Delivery Unit, Lead Ministers for each lab, and specific initiative owners identified in detailed 3-ft delivery plans.


SOUTH AFRICAN CHALLENGES• Current fleet not meeting current needs.

• Vessels not built for specific African sea conditions.

• Maritime related scarce skills.

• Lack of training vessels for national cadet training programme.

• Lack of national shipbuilding capability.

• Lack of dry docking facilities for larger vessels.

MARITIME BUSINESS OPPORTUNITIES DAY, HELSINKI 24 NOVEMBER

2016

OPPORTUNITIES• Substantial opportunity exists for research partnerships, academic

exchange and infrastructure investment financing.

• South Africa is the primary conduit for entry into Africa's blue

economy.

• Build ships in Africa for Africa.• International technology partnerships.

• Shipyard grant programme.

• Type of vessels required: Scientific, cadet training, OPV, IPV, OSV, PSV,

hydrographic, frigates, patrol, survey, cable laying, tugs, fishing.

• Develop, then commercialise the science.

• Shipbuilding and repairing: Strong driver - economic growth.

• Socioeconomic benefits – GDP, employment, skills development.


OPPORTUNITY MATRIXVesseltype Organisation Size Steeel

requirements

Scientific research

vessels(2)

OPV(2)

IPV

DAFF

DAFF/EnvironmentalAffairs

DAFF

1x18m

1x60m

2x80m

3x40m

1600ton

1200ton

2x1200ton

3x1500ton

Navyvessels:IPV(3)OPV(3)

Frigats(4)

HydrographicResearchVessel(1)

DOD

3x40m3x80m

4x100m

1x100m

3x500ton3x1200ton

4x1400ton

1x1000ton

Fishingvessels:

Recapitalisation(20)

Fishingindustry

20x15m

20x300ton

CableLayingVessels(3) DepartmentofTransport 3x110m 3x2500ton

Oil/Gas:OSV(4)PSV(4)

OilandGasIndustry 4x80m4x60m

4x1600ton4x1200ton

HarboursTugs(10) TNPA 10x40m 10x400tonPollution ControlVessels(4)

DEA 4x40m 4x330ton

SearchandRescueTugs(2)

SAMSA 2x80m

2x1600ton


CONCLUSION

• Industry led maritime cluster.

• Enabling legislation and incentives.

• Diversify – new emerging blue economies.

• Contributor to labour income and GDP.

• Design and build ships for African sea-going conditions.

• USG advisory Services is strategically positioned to advise

on technical, research and financing investment for South

Africa’s blue economy.


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