Tuesday, August 22, 2017
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Paramount envisages a pan-African defence industry

Ivor Ichikowitz.Ivor Ichikowitz, Founder and Executive Chairman for Paramount Group, is pushing for the creation of a pan-African defence industry, as the manufacture of aircraft, ships, vehicles, and communications networks has broader economic benefits than purely military or security applications.

Ichikowitz said that the defence industry creates new productive activities that train and employ large numbers of people, encourages innovation, higher standards and competitive practices, and multiplies the skills base of the country. He cites the establishment of Airbus by European countries as an example of what can be achieved through collaboration

“Some years ago Paramount Group became the largest privately-owned aerospace and defence manufacturer in Africa…This is where we live and work, and where we want to continue making our contribution to the industrial development and manufacturing base of our country and our continent.

“Africa will never be in a position to take its destiny in its own hands until it can provide for its own security, and create a stable environment for its nations and their people to live and work in safety and in freedom…It is not the sole condition, but it is the required foundation upon which a viable future can be built.

“I want to make the case for a Pan-African Defence Industry. It might sound ambitious, but all great journeys start with the first step, and we at Paramount Group believe it is both achievable and necessary. Some of the building blocks are already in place. Allow me to make the case as follows:

“Today there is much talk about the industrialisation of the continent…There is talk of transcontinental highways, railroads, dams, bridges, harbours and power plants that will promote regional economic integration, spur industrial development, diversify economies and create new manufacturing opportunities. Some projects are already underway, but their full potential cannot be unlocked for as long as governments do not have the means to secure their national territories and stabilise their societies.

“Almost all developed countries commenced their industrialisation with a vibrant defence industry at the heart of their development. Many of their technologies, products and services found their way into everyday civilian life, improving the lives of millions of people. From that base they diversified into many other manufacturing activities and became global leaders. There is no reason why the path of Africa’s development should be any different.

“Manufacturing aircraft, maritime vessels, vehicles, and communications networks has much broader economic benefits than their strictly military or security applications. It creates new productive activities that train and employ large numbers of people, encourages innovation, higher standards and competitive practices, and multiplies the skills base of the country.

“Developing industries more technologically advanced than the current norm in Africa is well within the capability of African countries, but they are capital intensive and beyond the means of most to do it on their own. Even the EU, far wealthier than Africa and already possessed of the human capital and industrial experience, created Airbus as a collaborative venture among several countries and pooled their resources to build a global conglomerate in the aviation industry.

“South African companies also participate in Airbus manufacturing programmes, as they do for Boeing and others. Morocco has been actively developing its aviation sector, and is already employing over 11 000 people supplying components to the major aircraft makers, with Ethiopia looking set to follow. Kenya, Nigeria and Egypt have the domestic capability to grow in this sector, and with these few examples we have the basic building blocks for a much more consolidated African aviation and aerospace industry that will play an important role in the continent’s industrialisation.

“The traditional weaknesses, however, still have to be overcome: these companies all talk to their investors and customers in Europe, the US, and elsewhere, but not enough to each other. By combining their skills and capabilities, they are much stronger together, and can contribute significantly to building the advanced economy of Africa.

“Similarly, several countries on the continent have automotive manufacturing capacity; South Africa, Nigeria, and Morocco among them. It is a substantial step from building civilian cars and trucks to military vehicles and armoured personnel carriers, but it is a logical step that can be achieved by companies who already have the capability working with partners elsewhere on the continent. This would make business sense as well as contribute to the industrial base of a number of African countries.

“Africa is surrounded by sea, has several inland lakes and rivers, and yet few vessels of consequence are built in Africa. That surely has to change. Operation Phakisa is a recent SA initiative to develop the blue economy in all of its diverse aspects, including the security sphere. South African shipbuilders are already growing their share of this market, and other African countries are showing an interest in expanding their harbours and developing their access to the ocean economy. While perhaps still in its early stages, the possibility of linking these companies and countries in a coordinated manner to serve Africa’s developmental and security needs, is too valuable an opportunity to miss.

“One key point in all of this is that these developments need not, indeed should not, be solely state controlled. If governments could do it on their own it would have happened a long time ago. It has not happened because governments do not have the capacity nor the capital, and usually have other priorities. There is nothing wrong with that, and this is not a criticism of governments, but rather acceptance of a reality that governments cannot do everything, nor should they try. Their responsibility is the security of the state and its citizens; maintenance of a stable, enabling environment for commerce and industry to flourish, and guidance on national priorities. The private sector can pretty much do the rest, provided it is encouraged and enabled to do so.

“The creation of a Pan-African defence industry requires both governments and private companies to agree on their respective roles and responsibilities, build on what already exists, invest in new production where it makes commercial sense, and clear the way for the continent to develop its industry. Africa will bring new ideas, technologies and solutions to existing manufacturing processes, and enrich the global industry in ways we have not yet imagined,” Ichikowitz concluded.
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