2023 a year of ‘good’ mixed with ‘bad’ and some ‘ugly’ for the SA defence industry

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2023 showed that the SA defence industry (SADI) is mainly on its own when looking for solutions and market opportunities.

2023 kicked off with a bang and the rolling story of the Lady R docking in Simons Town. Allegations were made that a SADI role-player could have been exporting weapons to Russia. This proved to be incorrect, but the damage was done. The story grew a tentacle with the landing of an Il-76 at Air Force Base Waterkloof. These should not have been issues, but the switching off of transponders really was an ugly occurrence that tainted the country’s name. These own goals really don’t assist SADI when looking to promote South Africa as a source of solutions.

As a good element countering this issue, Reutech has developed a passive radar solution for detecting ‘dark’ vessels. The Reutech defence and electronics unit had a strong year, with the business unit offering significant value for shareholders. A new strategy under Trevor Raman is taking shape nicely.

The SADI electronics segment remains strong, as borne out by healthy export figures. The DoD is looking at acquiring new radar systems, low-cost target drones and electronic warfare systems. SAAB Grintek Defence (SGD) are consolidating their integrated electronic warfare self-defence solutions with new top management, progressing naval and airborne solutions, including IDAS 310 development. Hensoldt SA remains a shining light within the SADI. The ASTUS UAV, Quadome (Radar Division), Skylark-N (EW Division) and Striker II Helmet (Optronics Division) show the benefit Hensoldt offers. Reutech, SGD and Hensoldt SA show the potential of the larger electronics entities. 2023 also saw newcomers in the sensor arena. One such newcomer is ‘To-the-Point-International’ with a range of turret sights and integrated remote weapon solutions.

It seems to have been a good year for Rheinmetall Denel Munition (RDM). Multiple 40 mm and 155 mm ammunition contracts were secured during the year. This is good for the SADI as there is generally a ripple effect in securing contracts with new developments. The end of 2023 saw RDM demonstrating refurbished ammunition as well as announcing the development of a ramjet-powered 155 mm artillery round.

The SADI armoured vehicle segment was active in 2023. DCD Protected Mobility celebrated its 125th anniversary with the launch a new vehicle (Springbuck Weapons Carrier) to compliment its already impressive lineup. The Defence Demo Day provided the opportunity for potential local APC suppliers to demonstrate their vehicles (OTT Solutions’ Puma, Milkor 4×4, Twiga Nyathi, ICP Reva X and the DCD Protected Mobility Springbuck) with a view to a response to the Armscor APC RFI issued in January 2023.

SVI secured a first order for the six-wheeled Max 3. Paramount made headway in the armoured vehicle segment with news of multiple Mbombe 6 customers and entry into India in partnership with Bharat Forge manufacturing the Kalyani M4 (Mbombe 4 variant). The OTT Solutions Ratel Service Life Extension Programme (SLEP) fire power enhancement was demonstrated to the South African National Defence Force (SANDF). The Ratel SLEP maximises the use of local solutions for a system upgrade that is suitable for enhancing a total fighting vehicle capability. The armoured vehicle segment is showing resilience in a tough market. The new timelines for Project Hoefyster were released. 2024 looks to be an exciting year for Denel Land System. The Badger solution still seems to be touted as a ‘silver bullet’ for Denel’s ailments.

The SADI’s challenge remains government support. Really good news was the Minister of Defence pledging support for the SADI. This was followed by a strong budget speech. The Minister has committed to finalising Revised Level of Defence Ambition by March 2024.

In May 2023, it seemed that there would eventually be a Defence Industry Lekgotla. Bad news! The Defence Industry Lekgotla did not happen in 2023. This is a missed opportunity. AMD did facilitate discussions on the potential for Public Private Partnership (PPP) initiatives in the defence sector.

The PCDMV & JSCD conducted a joint study tour to Germany in June 2023. The study tour looked at the benefits the defence industry could offer the nation. Positive observations were made around the defence industry. The Ugly element remains the study tour recommendation affecting SADI that needs most urgent implementation is the urgent finalisation and implementation of the Directorate Conventional Arms Control (DCAC) electronic permit application system. Why is this still not complete? Future study tours really need to take in Turkey and South Korea as guiding countries for the defence industry.

With the 2024 elections on the horizon, Minister Modise may not have a chance to assist in guiding the SADI future until after June 2024 at the earliest. General SADI government support then remains in limbo.

Government has offered support for Denel’s revival through the implementation of the Denel turnaround strategy. The Top SANDF echelon is up to speed on Denel “mysteries” and CSANDF expressed support for Denel. This is positive. Finally, Denel received a permanent CEO appointment. According to the Minister of Finance, Denel still remains financially distressed, but a full time CEO that has the relevant experience can have a positive impact.

Unfortunately, the defence capability experienced ugly incidents towards the end of the year. In September, three SA Navy submariners died during an accident at sea, four SA Army soldiers died in a fatal road crash on route to Exercise Vuk’uhlome, and then there was the runaway veld fire that claimed the lives of six soldiers. The Board of Inquiry results are still awaited, but budget constraints could be seen as a contributing factor. The Portfolio Committee on Defence and Military Veterans and the Joint Standing Committee on Defence have also mentioned that budget increase is desirable, but it needs to be based on the Revised Level of Defence Ambition that these committees still have not seen.

From a local defence force perspective, some of the best news for the SADI was the staffing of the Defence Materiel Division positions Director Army Acquisition, Director Air Force Acquisition and Director Navy Acquisition from 1 December 2023. These are the people that can drive the renewal element of the SANDF Journey to Greatness, hopefully using SADI capabilities.

From the above, it seems that the SADI can be proud of 2023. The question remains what is the overarching goal for South Africa’s defence capability.

Written by James Kerr, Orion Consulting CC, which provides Market Entry Strategy and Bid & Proposal services to the Aerospace & Defence related industry and assists international SME mission system product suppliers to gain traction in South Africa.