The National Conventional Arms Control Committee (NCACC) has approved multiple defence transactions with Saudi Arabia and the United Arab Emirates (UAE), unlocking billions of rands worth of defence exports from South Africa.
This was revealed by Dr Moses Khanyile, National Defence Industry Council (NDIC) Coordinator, who was briefing the Joint Standing Committee on Defence on 3 March on plans to boost the South African defence industry. He noted that there have been issues with some countries in the Middle East that saw defence exports halted, but “this matter has been resolved following the decision by the National Conventional Arms Control Committee to approve normal transactions with these countries.” The countries include the UAE, Saudi Arabia, Turkey, and Oman.
Over R5.5 billion worth of transactions have been immediately unlocked thanks to the NCACC decision to allow exports, while R21 billion is still to be unlocked. Unfortunately, R2 billion in opportunities have been lost because of the impasse and delays emanating from the concerns Saudi Arabia and the UAE had.
In 2019 it emerged that the NCACC was insisting that it be allowed to inspect customer countries’ facilities to verify compliance and that they must sign end user certificates (EUCs) in which they pledge not to sell their weapons on to third parties. This caused a halt in export approvals to South Africa’s biggest military clients: Saudi Arabia and the United Arab Emirates, with experts warning the stricter regulations could destroy the South African defence industry.
Saudi Arabia and the United Arab Emirates, which account for at least a third of South Africa’s arms exports, rejected the inspections which they considered a violation of their sovereignty, whilst Oman and Algeria also refused inspections, and saw imports blocked.
Khanyile noted that the R5 billion in exports that has been unlocked pales in comparison to other exports to the Middle East – the United States, United Kingdom, France and Germany exported R135 billion worth of equipment to Saudi Arabia and the UAE between 2016 and 2020.
Khanyile said that even though South African exports have been allowed to resume, the prolonged delays have had a negative impact, leading to some companies being threatened with blacklisting; the cancellation or stalling on negotiations for future contracts; and loss of market share to competitors.
“It has definitely jeopardised the standing of the country and the industry in those countries and therefore it is important that something be done, that a comprehensive strategy be developed to undo the damage and re-engage all these countries in these regions,” Khanyile said.
“There is still an issue to deal with in Oman. Negotiations around new end user certificates were accepted by other countries like Saudi Arabia and the UAE but Oman still wants further clarity on the implications of the EUC.”
Khanyile emphasised that the NCACC is a clear enabler of business for the defence industry and is crucial in terms of getting approvals and speedily processing of permits. “The industry feels in considering permits it is important for the NCACC to ensure the primacy of national economic interests.”
He told the Committee that as there has been a steep decline in terms of local defence consumption, the industry has been forced to rely on exports. “Over three quarters of production is destined for the external market. The industry is urging government to play an active role in marketing the local defence industry, just as other major powers do when they engage their diplomatic counterparts. When other major countries have bilaterals, multilaterals, they normally include defence industry players because industry relies on other governments as clients.”
Khanyile said that each time the South African government engages other countries it is an opportunity to market the defence industry. “It is important delegations include defence industry players. Special attention should be paid to countries in Africa and the Middle East because that’s a growing market for the industry.”