Minister of Trade and Industry Rob Davies says the Strategic Defencce Package, better known as the “arms deal”, has created 73 000 jobs and has exceeded government’s expectations.
Business Day reports that in response to questions by Democratic Alliance MP Tim Harris, Davies said that the offsets undertaken by SDP contractors generated more than the 65 000 direct, indirect and cumulative jobs that the government expected them to do.
Davies told the National Assembly the latest assessment, undertaken last year, of the creation of jobs by national industrial participation offsets showed they had created 85 000 direct and indirect jobs, with 73 000 from the arms deal.
Harris in September avered that the National Industrial Participation Programme’s (NIPP) Performance Review 2009 showed SDP contractors had created only 40% of the jobs they committed to – “only 26 000 direct jobs in ten years, instead of the 65 000 jobs promised ten years ago.” Harris said this was baleful as the R47.4 billion SDP “was signed on the condition that international arms companies ‘offset’ their contracts by investing directly in South Africa. This industrial participation was often the main reason contracts were signed with specific bidders.”
In the report the DTI says the programme is working, “and it is working by and large along the lines intended. There is little doubt that the NIPP has beneficially impacted on the growth and trajectory of the South African economy and thus on the lives of our citizens.” The DTI said the programme has led to the implementation of 220 projects, sometimes in remote rural areas, and contributed an annual average of R14.8 billion to the gross domestic product. Some 44 percent of the jobs created were filled by semi-skilled workers.
The NIPP came into effect in South Africa on September 1, 1996. The programme is obligatory for all overseas purchases greater than US$10 million and could be discharged in various ways, including investment, export promotion, research or collaborative business activity.
Davies yesterday also told MPs the scheme was being reviewed as part of a more comprehensive review of government procurement to link the scheme more closely with the industrial policy action plan. One of the deficiencies in the existing scheme, Davies said during question time to ministers in the economic cluster, is that it is unclear whether it applies to procurement by municipalities and provinces as well as to national government. “We need to be able to achieve much more from procurement by way of encouraging local industrial development. We will also foreground what we expect in terms of direct job creation,” he said.
Another aim of the review will be to require that companies are tied to meeting their obligations in the specific sector in which they have expertise rather than being allowed to invest in any sector, as is currently the case, Business Day added.