Defence industry job losses will continue if South Africa cannot export


The South African defence industry will continue to lose jobs as well as revenue, fiscal contributions and technological prowess if it is not able to reasonably export in the near future, the Executive Director of the South African Aerospace, Maritime and Defence Industries Association (AMD) has warned.

Simphiwe Hamilton was responding to efforts being made to unlock arms exports after the National Conventional Arms Control Committee (NCACC) revealed it is amending the wording of controversial end user certificates (EUCs).

A draft letter from NCACC head Ezra Jele to the industry said the NCACC planned to replace a clause allowing for “on-site verification … performed by an inspector designated by the (defence) minister.” The new clause would state “on-site verification of the controlled items may be performed, through diplomatic process”.

The proposed changes were aimed at assuaging the concerns of importing nations that objected to the original wording, in the hope that exports could resume – billions of Rands worth of exports have been held up because major South African clients like Saudi Arabia and the United Arab Emirates are reluctant to allow on-site inspection.

Writing in his personal capacity, Hamilton provides some clarification on the export challenges facing the industry. “As a matter of record, the Kingdom of Saudi Arabia (KSA) has never refused to sign our EUCs with the post-delivery, on-site verification/inspection clause and we remain confident that exports to this key partner nation will be enabled as soon as the SA government has considered and assessed the merits of all applications in this regard. Our other partners in the region have also shown a very strong inclination, acceptance and approval of the proposed changes to this clause in our EUCs and again we remain optimistic that once gazetted and domesticated in the client countries this will see exports resume,” he stated.

According to Hamilton, the clause in question does not seek to enable the inspection of the client ‘facilities’ but the inspection of the equipment as supplied/exported by the South African defence industry. “The South African defence industry, though supportive of and voluntarily compliant with the arms control regime, would not enable any perceived intrusion into the sovereignty and security of its clients.”

Exports to the Gulf and North Africa are a key source of revenue for local defence companies including state-owned Denel, Paramount Group and Rheinmetall Denel Munition, a joint venture between Denel and German industrial giant Rheinmetall. South African defence firms warned of hundreds of job cuts if the wording of the EUC clause wasn’t changed to resolve the row with its major clients.

“The reference to the industry threatening job cuts is unfortunate as it makes this look like a reaction of the industry to the inability to export,” Hamilton states. “The truth, however, is that the much-feared job losses are not a threat but a direct result of the inability to export. Sadly, these job losses – along with loss of revenues, loss of fiscal contributions, loss of technological prowess etc. – will continue should the South African defence industry not be able to reasonably export in the near future.”

Hamilton said that unlocking South African defence exports is key to South Africa’s economic growth, re-industrialisation and technological advancement. He believes the defence industry can contribute to the revival of the South African economy, retain jobs and ensure South Africa’s standing as a responsible trader of advanced aerospace and defence material that enables its partner clients to meet their security obligations and defend themselves against possible aggression and terrorist attacks.

“The value of the SADI as contributor to South African GDP, much needed jobs and tax revenues needs to be acknowledged especially in these tough economic times.”

“South Africa needs to find an intricate balance between its international obligations and image in relation to the protection of human rights, the advancement of the non-proliferation agenda as well as contributing to regional stability with its own national interests and imperatives such as economic growth, job creation, a favourable balance of trade and technological advancements.

“The silencing of the guns in both the African continent and abroad requires strong and well-equipped governments and legitimate arms exports enable exactly this prospect and should be supported by all peace-loving South Africans,” Hamilton stated.

“We again reiterate that the time has come for all of us as South Africans to cease with the senseless demonization of the defence community and to accept that there is no anomaly in a democratic South Africa having a defence capability (both in the form of the armed forces and the associated industry) and to rather embrace it and harness it to the best benefit of our country and its people,” Hamilton concluded.