SA's flagging defence industry needs ammunition to remain a force
To achieve this, the country’s defence force should have appropriate defence capabilities, that is, sound doctrine and practices, capable and trained soldiers and operational and effective military equipment.
The equipment is designed, developed and manufactured by a capable defence industry.
The SA Defence Industry (Sadi) consists of entities that focus or have capabilities in design, development, manufacture, testing, evaluation and maintenance of military equipment and systems.
The mandate of defence is to “defend and protect the republic, its territorial integrity and its people, in accordance with the constitution and the principles of international law regulating the use of force”.
Whereas ordinary South Africans may think that the SA National Defence Force (SANDF) only needs to occupy itself with preparing for conventional war and assisting in multilateral peacekeeping missions, there are many other functions that the defence force occupies itself with while complying with its constitutional mandate. These include:
* Peacekeeping functions within the region. In the past decade, the SANDF has been deployed in various countries within the African continent for peacekeeping missions.
* Border protection. The SANDF ensures the integrity of the country's 4471km borders.
* Maritime patrols to curb human trafficking and piracy activities.
* Protection of marine life, under-sea minerals and the exclusive economic zone.
* Disaster relief and emergency aid.
* Search and rescue activities.
* Aid to civil society.
All these require support from a capable defence industry.
In the 1980s, Sadi had 130000 employees (9% of total manufacturing jobs in the country) in 3000 companies (10% of the manufacturing sector). The industry employed 10% of all engineers and scientists and went on to establish a reputation across the world with products such as long-range artillery (Denel’s G5 and G6), mine-protected vehicles, mine-detection vehicles (Husky used by Mechem), combat support helicopter (Rooivalk), short-range missiles and guided munitions and advanced electro-optical sensors.
Today, the industry comprises 120 companies that employ 15000 people and generate annual revenues of R19billion.
Defence force acquisition from the local industry dropped from R26.2bn in 1989/90 to R7bn in 2017 and commensurately Sadi turnover dropped from R31.6bn to R19bn in 2017.
Sadi exports grew from R873million in the mid-1990s to R11bn in 2017. This means the Sadi has become less dependant on the defence budget and has been largely sustained by exports over the last few years.
Due to the arms embargo during the apartheid era, the country had no choice but to develop its own defence industry capability.
Hence, it was no surprise that when Sadi became exposed to the global defence market after 1994, it quickly made significant strides in exports built in South Africa.
While the growth in exports demonstrates that Sadi has become less dependent on defence spending, it should be noted that any vibrant defence industry is anchored by innovation (R&D activity), and reduced spending on R&D (both public and private) will eventually result in reduced exportability of defence products.
Also, defence products are usually traded through government-to-government contractual arrangements, which are, in turn, dependent on diplomatic relations between the countries involved.
The government, therefore, has a major role to play in promoting the country’s defence products through its diplomatic policy machinery.
Most countries are reluctant to procure defence products from countries whose domestic security forces do not have the same products in operation.
Hence one of the most effective marketing tools is to see the products being used by the forces in the country of their origin.
Lower national defence spending therefore still affects sustainability of the local industry, even if the latter is export-centric.
The local defence industry is as a result on the brink of collapse due to reduced domestic defence spending, but it can still be saved if the government took a more supportive approach towards the industry. Alternative funding for defence projects should be looked at, especially from sources other than the fiscus. The government should relax the stringent regulatory framework to allow such initiatives.
The defence sector should also be in the forefront of trade promotion efforts by the state, instead of receiving the “stepchild” treatment.
Planning within the government should also be more transparent to allow the industry to build capacity in anticipation of future projects. Countries such as India, Canada, Taiwan and others issue their five- to 10-year defence procurement plans in advance to allow the local industry to ready themselves.
This ensures an integrated effort towards growing and sustaining the defence sector. In the period of tough economic climates, such as is current, the government could launch an extensive equipment refurbishment programme with some limited elements of modernisation where industry would be encouraged to participate in line with its capabilities.
It is required in this case that Department of Defence and Armscor contract at lower levels (at sub-assembly and component levels) as opposed to “product system” level since the latter approach has a tendency to exclude smaller, yet critical industry players.
These initiatives would be enabled by a collaborative approach between industry and government based on transparency and inclusive planning, and anchored on “putting the country first” principle.
* Zondi is chief of defence materiel at the Department of Defence and writes in his personal capacity.
** The views expressed here are not necessarily those of Independent Media.