The Paramount Group has taken a 30% stake in South African communications company Emcom Wireless Ltd, which provides mission-critical radio communication solutions for defence forces and internal security.
The investment “has allowed Paramount Group to adapt to the growing market for peacekeeping which require high tech communications in order to operate effectively with multinational forces,” the company says in a statement. Paramount declined to give a value for the transaction.
The move is part of an aggressive acquisition strategy, Paramount Group executive chairman Ivor Ichikowitz says. Last year, the group bought a 19% stake in Aerosud, South Africa’s largest independent aerospace company, which manufactures parts for Airbus and Boeing including galleys, fuel supply systems and wing and fuselage components.
The company has also “recently” sold a substantial number of armoured vehicles to prominent African states and is concluding deals with others, allowing the business to double staff over the last 12 months to meet further demand. “African countries have increased defence spending by $4.1 billion since 2007 – which is quite a significant amount,” Ichikowitz says of research by the Stockholm International Peace Research Institute that shows defence spending has increased from $23.6 billion in 2007 to $27.7 billion in 2009 in response to growing insurgency, threats to stability and economic development as well as a boom in oil profits.
There is also a continent wide force modernisation drive and greater involvement in UN peacekeeping missions, which require flexible and well equipped forces. “I think African nations have finally ‘come of age’ and are keen to develop the capability to tackle security issues such as immigration, terrorism, humanitarian catastrophe and peacekeeping independently of external powers. This is a very positive development for Africa and the international community,” Ichikowitz avers.
“While some commentators have questioned whether this rise in expenditure is a good development, I think it’s important to note that there are many positive spin-offs associated with a strong African defence industry – particularly in the areas of technology development and employment.
“The reality is that a strong domestic defence industry stimulates innovation, provides employment in highly paid jobs and contributes significantly to government tax receipts,” Ichikowitz continues. “This is Africa’s moment. For too long Africa has been associated with economic underperformance and an inability to solve its own regional security issues. This rise in defence spending shows that African countries are assuming greater responsibility for the development of the continent. This is good for Africa’s people because it means the continent is more stable and politically independent.”
Pic: Paramount’s Mbombe armoured personnel carrier, unveiled at African Aerospace & Defence 2010 in September