Draft Defence Industry BBEEE charter published for second round of public comment


Trade and Industry Minister Rob Davies has gazetted the draft Broad-Based Black Economic Empowerment (BBBEE) Defence Sector charter for its second round of public comment and input which lasts until October 4.

Described as a fit-for purpose document developed specifically with the needs of South Africa’s defence industry in mind as well as the need to make space for military veterans in addition to women and the youth, the draft charter was signed off by Defence and Military Veterans Minister, Nosiviwe Mapisa-Nqakula in April. It then went to Davies’ office for his attention and hopes were expressed that it would be gazetted on or around June 16. This did not happen and its gazetting was announced on Friday (August 4) via a statement issued by the Department of Trade and industry.

The statement has it that the leadership of the Ministry of Defence and Military Veterans (DoDMV) along with Armscor and “defence stakeholders” developed the draft sector code which has now been approved and gazetted by Davies.

In the statement the Trade and Industry Minister said: “The scope of application of the Draft Sector Code is on all entities in the South African defence industry, in its entirety, including national or provincial departments, state owned and private enterprises. This includes those providing products and services to the state – whether they are procured from local or foreign-owned enterprises, defence manufacturing enterprises, research and development enterprises and other entities, as well as any role player and stakeholder that might opt in”.

The Defence Sector Code makes provision for companies to procure at least 60% of products from local companies and provide support for companies introducing new technology into the South African defence industry and, by extension, the SA National Defence Force (SANDF), as users of the new technology.
“This is a defence industry specific element designed to stimulate local manufacturing and increase global competitiveness. Another highlight is private sector entities in the defence industry must sub-contract no less than 30% of any contract exceeding R30 million to companies owned by black designated groups. This will enable such companies to be sustainable,” Davies said in the statement.

When the Defence Sector charter as drawn up by the defence industry, in the form of AMD (the South African Aerospace, Maritime and Defence Industries Association) with support from Armscor and the DoDMV, it attracted flak from some military veterans organisations and the trade union, Solidarity. This because it did not make provision for former SA Defence Force (SADF) members to become part of the local defence industry.

Solidarity went even further, saying, without the contributions of many former SADF members, South Africa would not have the defence industry it does.

Overall, the Defence Sector Charter is seen as an attempt to open up the local defence industry to small, medium and micro-sized enterprises (SMMEs) with the emphasis on previously disadvantaged groups, including women and youth. Being entirely defence oriented a decision was taken to include military veterans as a previously disadvantaged group with one of the drafts specifically framed to exclude former SADF members.