Armscor aims to develop defence industry business for veterans

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In what can be seen as an effort to ensure the entry of military veterans into the South African defence industry, Armscor has set up what it calls a “business development initiative”.

The State-owned defence materiel agency is funded largely from the national defence budget with self-generated revenue adding an undisclosed, but believed to be small, amount to income. Armscor lists its areas of expertise as acquisition; technology development; development and upgrading of products as well as maintenance and disposal of products. Also listed are its own operational research institutes, test and evaluation facilities as well as industry capabilities.

Armscor’s business development and incubation initiative appears set to be driven by Uhambo Innovation Hub, registered in Johannesburg’s Sandton. Its website has it the hub provides business services, resources and programmes to “enhance” business development. This happens by way of enterprise and supplier development as well as fund management and what is termed “outsourced incubation”.

According to an Armscor notice, it is “looking for high-potential small businesses owned by military veterans to participate in an incubation programme aimed at helping the SMEs grow into sustainable businesses by providing business development support, access to business infrastructure and marketing linkage opportunities”.

Six criteria have to be met before consideration will be given for access to the initiative. They include 51% or more black ownership by military veterans and that veteran status has to be verifiable on the Department of Military Veterans’ (DMV) database. Other criteria cover registration on government’s Central Supplier Database (CSD), that entities be tax registered and “be aligned with Armscor procurement targets (the word “parget” appears in the notice but is presumably a typographic error).

The business development initiative makes no mention of the Defence Industry Fund (DIF), administered by Crede Capital Partners and said at the time of its announcement to be a vehicle to raise funds for small and medium-sized enterprises (SMEs) in the wider South African defence sector. This would happen via a contract finance fund and similar funds for trade finance and annuity to provide sale and lease back finance.



At the launch of the DIF Crede, as fund manager, indicated it was targeting a R1 billion fund with a maximum loan size of R50 million and a minimum of R100 000. Loan terms would be from one to 36 months. In February two years ago, Crede said the first SMEs to benefit from the DIF would receive capital of between R2.4 and R6 million “in the next two to three weeks”. The money was reportedly approved for Armscor specialised technical equipment contracts in the wider defence sector.