Alternative funding, models needed for SA defence industry – Armscor


The South African defence industry needs to find different funding methods and new models. This includes pursuing lucrative United Nations procurement in Africa, Armscor CEO Kevin Wakeford has said.

Speaking at the Aerospace, Maritime and Defence (AMD) conference in Pretoria, Wakeford said there is no space in the defence budget for traditional defence acquisitions and as a result the National Defence Industry Council (NDIC) has been commissioned to look at alternative procurement models including credit, leasing and finance facilities.
“We also have to consider foreign private equity participation,” Wakeford said, as well as commercialisation of intellectual property and sweating assets.
“The way we do things will never be the same. We cannot allow our industry to implode. We can’t allow a leading/cutting edge technology base to be diluted or to evaporate. We cannot allow that,” Wakeford said in reference to the shrinking defence budget that is impacting the South African industry, which relies on exports to survive.

Wakeford said there are major opportunities in peacekeeping and South African companies could become heavily involved in supporting this sector. He said the United Nations’ MONUSCO peacekeeping mission in the Democratic Republic of Congo (DRC) is one of the biggest spenders in Africa but most of its goods are flown in from Europe, land at Entebbe in Uganda and are distributed in Africa. He urged South African companies to get closer to peacekeeping forces and supply them.

One of the ways of supplying peacekeeping forces in Africa could be via sea instead of by air. As an example of what is possible, he said Armscor negotiated a deal with Transnet at the port of Nqura that allows 100 TEUs (twenty foot equivalent containers) to come in at a time. “We are importing goods for Alkantpan for artillery testing through that port [Nqura].”

An idea Wakeford floated was to have regional task forces with equipment ready on standby and which is paid for by the hour or the month. “So it’s there, ready to intervene for peacekeeping or disaster relief.”

Wakeford bemoaned the fact that the United Nations is not spending money in South Africa, especially as a lot of the South African National Defence Force’s (SANDF’s) equipment is not serviceable in the DRC and therefore does not generate reimbursements.
“We as an industry, Armscor, the defence force, are not seeing the economic model of the United Nations. They don’t buy equipment; they use it and reimburse it if you comply. Everything they require – food, water – is all about service solutions.” He said South Africa should be supplying everything United Nations forces require in Africa.
“We have to be part of the solution. This involves, industry, Armscor, foreign partners and the defence force. Let’s get creative. It cannot be business as usual. We have to start with peacekeeping as well. Just as exports have grown so our defence industry could benefit if we optimise the United Nations presence in Africa. We need to rake in those revenue streams.”