Defence and Military Veterans Minister Nosiviwe Mapisa-Nqakula announced details of the Defence Industry Charter that will substantially change the face of the industry, as far as black economic empowerment and utilisation of locally produced components and products are concerned.
Speaking at last’s week’s National Defence Industry Council (NDIC) first ever ministerial workshop in Centurion, she said the Charter sets new ownership targets for the industry.
“For the first year of implementation is it 25%, 30% in the second year and 35% in the third year. It also specifically sets ownership for black women at 10% in the first year and 15% in the second and third years.
“The Charter’s new targets are intended to boost support of entrants from previously disadvantaged communities, including women and youth, while ensuring those who are empowered in this manner also attain the necessary skills and knowledge transfer.”
Mapisa-Nqakula said the Charter also contained a mechanism to promote localisation.
“Sixty percent of defence materiel products will be procured from local suppliers and there will be an incentive to reward local companies which develop new technologies in the defence industry. This will stimulate local manufacture and increase global competitiveness.”
She said the rejection of the “once empowered, always empowered” principle, contentious in many transformation sectors was an important component of the Defence Charter.
“This will mean black ownership will not be recognised after the sale or loss of equity of a black shareholder. The Charter will also ensure a target of four percent of payroll is contributed to skills development and a further one percent specifically to military veterans skills development.
“Most importantly the Charter directs the establishment of a Defence Enterprise and Supplier Development Fund. The turnover threshold for emerging and small enterprises will be lowered to R5m per annum.”
Mapisa-Nqakula said it was planned to officially launch the Charter on June 16.
As an example of what the local defence industry is capable of the Minister pointed to the Rooivalk combat support helicopter as one project where defence spending has been transformed into defence investment.
“The Rooivalk project provides an outstanding example. The project brought South Africa a healthy return on its investment of R 6,25 billion in development and production of the Rooivalk and its Mokopa missile.
“By the end of 2013 exports of Rooivalk sub-systems and of aircraft components manufactured using the skills learned from the project had generated revenues of some R 15,4 billion in foreign currency and sustained or created employment.
“The skills and capabilities that grew out of the project also enabled local industry to take on some R 10,5 billion of work on aircraft and ships purchased for the defence force, saving that amount of foreign currency and sustaining employment.
“Engineers from the Rooivalk project are now to be found in other sectors of the economy, including the Square Kilometre Array (SKA) telescope project, while skills learned have also spread around the wider economy.
“So an investment of R 6,25 billion Rand brought foreign currency revenues or savings of almost R 26 billion and established a range of skills and capabilities in South Africa now employed in many other sectors of the economy,” she said.