(000228.79-E000157.73NRLOSUC20V)[We still have an arms industry in SA though its going downwards and its a shadow of what it once was. Jan]
Soldier serving with the African Union Mission in Somalia (AMISOM) walks in front of a South African-built Casspir. (Image: Wikimedia Commons)
- Over the past year, South African defence companies exported armoured combat vehicles worth more than R880 million.
- The United Arab Emirates (UAE) continues to be the main buyer of these vehicles, but South Africa has a wide range of other buyers for its different defence products.
- Still, the local industry has seen its exports halve since 2017 – due in large part to Denel’s financial woes.
- For more articles, go to www.businessinsider.co.za.
South Africa’s market share in the international arms trade shrank in recent years, due in large part to Denel’s much-publicised financial woes.
Still, South Africa exported military products worth more than R6.5 billion in the past year, which supported 12,500 permanent jobs in the local industry. A report recently tabled before Parliament’s Joint Standing Committee on Defence (JSCD), shows that locally produced weapons are still sought-after, in some cases, by a long list of countries.
Weapons, ammunitions, fire control and related warning equipment are in high demand but South Africa’s expertise in the building of armoured vehicles remains especially coveted.
Mine-resistant armoured vehicles, namely Denel’s Casspir and the Mbombe, made by SA’s Paramount Group, continue to hold consistent export value. Over the past year, more than R880 million in the vehicles were sold, with the United Arab Emirates (UAE) representing 40% of sales.
The UAE bought 42 of these combat-ready machines in the previous financial year, paying almost R349 million to South African suppliers. These armoured personnel carriers, which can be equipped to conduct reconnaissance operations or combat engagements, have also been supplied to Senegal and Mali.
Casspirs, procured from South Africa by the United Nations (UN), have also become a common sight on the war-torn streets of Somalia.
The export of armoured vehicles has not been without controversy. The National Conventional Arms Control Committee (NCACC) of South Africa was recently grilled over the “irresponsible” supply of these vehicles to Turkey which, allegedly, ended up in Libya.
While armoured vehicles dominate South Africa’s export portfolio, large-calibre artillery including the G5 and G6 Howitzer – worth R127.70 million – has found its way to Egypt, Germany, France, Saudi Arabia, Thailand, and Indonesia.
In 2018, Malaysia bought more than 200 locally produced anti-tank guided missiles and turrets, known as the ZT3 Ingwe, for R175.5 million.
Locally produced bombs and rockets are especially popular in Europe, with Sweden and the Netherlands acquiring its share of 10,000 weapons shipped since 2018.
Light weapons have recently been exported to Canada, Brazil, Germany, Jordan, Italy, Pakistan, Austria, India, Singapore, and the US.
But while this list may seem expansive, in reality the local defence industry is under pressure.
Sandile Ndlovu, executive director of the Aerospace, Maritime and Defence Industries Association (AMD), which represents the industry in South Africa, told parliament that its revenue declined from R19.5 billion to R12.5 billion between 2016/2017 to 2019/2020. Exports have halved in this time, losing R5.5 billion in value. Most worrying, as noted by Ndlovu, was the 70% reduction in research and development spending which places South Africa at a steep disadvantage in an increasingly competitive global market.
Ndlovu added that while strict control measures from most notably the NCAC, ensures that “South Africa remains a respected member of the international community”, government’s capacity had been stretched to the limit. This has, in turn, hampered SADI’s competitiveness and ability to successfully export “due to inefficiencies, ineffectiveness and unpredictability of the system”.
The ongoing crisis at Denel, South Africa’s state-owned aerospace and military technology company, has made matters worse for the local industry. Teetering on the brink of business rescue and marred by years of financial mismanagement, Denel’s losses have surpassed R4.5 billion since 2017. It needs R3.8 billion over the next two years to survive – but from the recent medium-term budget, it doesn’t look as if this money will be forthcoming.
This is bad news for industry supply chains as Denel has traditionally spearheaded the charge into the foreign export market.
It is estimated that more than 200 local companies have been negatively impacted by Denel’s predicament.
Denel’s position, coupled with increased competitiveness in the global market, also threatens South Africa’s reliance on the Middle East.
In 2018, Minister of Defence and Military Veterans, Nosiviwe Mapisa-Nqakula, warned that Middle East was actively increasing its capacity to manufacture arms for both local use and exports. The region which has been a trusted procurer of South African made armaments will “will soon be direct competitors with (the local industry)”.
South Africa stands to lose R20.5 billion in export opportunities to the Middle East as a result.