Statement: Speech by the Secretary for Defence Ms Nompumelelo Mpofu on the fourth defence industry day, 17 March 2011 at the CSIR

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The Deputy Minister of Defence and Military Veterans, Mr Thabang Makwetla, the Gauteng MEC for Economic Affairs, fellow DG’s and Heads of Departments present here today, the Acting CSANDF, CAF, CNavy, and representatives of other Chiefs of Arms of Services and Service Divisions, DDGs, Generals, senior officers from various government departments and the SANDF, captains of industry – Mr Riaz Saloojee, the Chairperson and CEO of AMD, ladies and gentlemen. I greet you all and welcome you to this, the fourth annual DOD – Industry Day.

I would like to start by acknowledging, that this interaction between the Leadership of the Defence Department and the South African Defence Industry has been long outstanding and we have not been able to prioritise the engagement with you as a key stakeholder and partner of the DOD and the SANDF. This is not in any way an indication of the challenges of having new political leadership and senior management who needed to familiarize themselves and attend to rather urgent matters in an already very complex department. We have also been certain that our engagement must be based on concrete deliberation on the outstanding policy framework that would create the basis for our partnership and a realistic assessment of the strategic interventions required to strengthen our relations and promote the growth of the Defence Industry. I hope that this is a start of a more regular and constructive engagement process that will lead us to the attainment of both SA national objectives of growth and development as well as your objectives as industry.

To this end, the hosting of this day by the DOD is an indication of our unwavering commitment to continue to engage with you and to share how best we can address the issues that hinder the realization of our respective full potential.

I am aware that in the last three annual DOD Industry days, resolutions have been taken that are at various stages of fruition and I look forward to receiving feedback on the progress made in these areas. My focus today is with regards to two primary areas of concern that we as a department want to address:

First, we are committed to the compilation of a new SA Defence Industry Strategy that remains true to the guiding principles as espoused in the 1998 White Paper on Defence Related Industries which include but are not limited to:

The recognition of the South African Defence Industry (SADI) as an integral part of SA’s defence capabilities,

The commitment to the provision of the best possible weapons and equipment for our soldiers, hence the need to optimize our R&D budget as well as to get the best value for money spent in capital acquisition projects as well as in the procurement of goods and service during the operational life cycle of our equipment; AND

The commitment to support the SADI, both locally and abroad, in order to safeguard national interests.

Admittedly, the drafting of this all important document has been hamstrung by the delays in the finalization of the Department’s own Defence Strategy. We have thought this to be unwise and have decided to run these processes in parallel. Whilst there are key guidelines that will be required from the Defence Strategy – not least of which will be the determination of Strategic Defence Capabilities – I believe we can commence with the Defence Industry Strategy knowing that this is a key constraint that we will have to compensate for, during the drafting process, we would run interactive process and align as we proceed with the Defence Strategy. To this end, we would like to announce that we will, in the not so distant future and pending internal processes and approvals, be launching the process of compiling the SA Defence Industry Strategy which should be completed within the next 12 to 18 months. I hereby pledge the DOD’s commitment to providing Leadership and Guidance to the development of this important policy instrument. The DOD’s prerogative to drive this process and to engage with you at the appropriate stage. I can undertake to you that there will be meaningful and deliberate consultation with both yourselves and other key stakeholders like the Departments of Trade & Industry as well as Science and Technology.

I wish to further commit to you that the envisaged SA Defence Industry Strategy will, (and without pre-empting its likely inclination) not only be informed by the guiding principles I have already articulated but will be premised on an already acknowledged need for the DOD and SANDF to have a ‘partnership’ based approach in its engagement with the SADI. What is crucial to understand is that this ‘partnership’ between the military and the local defence industry is not aimed at obtaining ‘self-sufficiency’ in the provision of armaments but at ensuring degree of ‘self-reliance’ for both the SANDF and the SA government. Those who characterize Developmental States, which we aspire to be, say its strongest feature is the embedded autonomy with which the state engages stakeholder and particularly industry to create the basis for prosperity and growth.

We too, aim to be embedded in industry yet autonomous in order to balance the other social and economic needs.

It implies a shift of policy focus from the establishment and strengthening of the SA arms control regime (which is now firmly in place, is world renowned and should continue to direct the export of SA defence goods and services) on the one hand. To a focus on the other, on ensuring that the SADI’s role as an ‘integral part the SANDF’s capabilities’ now takes root in a more meaningful sense and within the context of a ‘home market’ for a SADI that must be innovative, competitive and profitable. To this end, the DOD and SANDF commits to the following:

Providing a degree of transparency and flexibility in Capital Acquisition planning, whilst ensuring the implementation of a stable and predictable long term funding framework (with multi-year contracting where appropriate) and premised on a ‘South Africa first’ approach (i.e. preferential procurement of SA defence goods and services) so that the industry can make decisions on how to allocate its own resources and optimally align its manufacturing and R&D capabilities to meet the SANDF’s current and future needs.

Defining strategic defence capabilities and then adopting requisite practices like the designation of centres of excellence that will (where appropriate) be contracted on a single source basis and sustained at appropriate levels in terms of both development and production capabilities. Where these do not exist locally, the military will ensure that the foreign supplier undertakes technology transfer to capacitate local industry to not only sustain the capability locally but to engage in future modifications and upgrades.

Based on the need to not only retain strategic defence capabilities but also to guarantee both the technological and operational advantage / superiority in the battlefield, the military will ensure the existence of a Defence Technology Strategy that is supported by an appropriate Technology Acquisition / Management processes that will be optimally resourced / funded, appropriately mandated and user driven to ensure that the SADI has access to the relevant technologies

Aligning all departmental support activities aimed at supporting the industry with specific reference to export support, countertrade, offsets and industrial participation whilst ensuring the optimal restructuring and transformation of the industry in line with both departmental objectives and broader SA government imperatives.

Addressing in the short and medium term the growing concern we have about industry capacity to meet the requirement of the DOD and to review and consolidate in line with a reprioritization intervention to ensure delivery on time and eliminate delays.

For this ‘partnership’ to succeed, there will have to be enhanced, consistent and transparent communication between the SANDF / DOD and the industry and this we are committed to.

The second matter relates to the national imperative of the empowerment of the previously disadvantaged population of our country. Not only has government issued the minimum compliance requirements in terms of the Codes of Good Practice on BBBEE but there is a need to demonstrate the DOD’s and SADI’s commitment through the compilation of a SADI BBBEE Charter. Once again, it is my wish that the SADI BBBEE Charter should, in parallel to the Strategy, be compiled in the next 12 to 18 months and be submitted Cabinet for approval and then to the Minister of Trade and Industry in accordance to the provisions of the Codes. In the interim, we have aligned Armscor’s policy and practice with our own/DOD’s internal policy on BEE which is in the process of approval. Within the constraints we currently have, we are also working towards the appointment of a dedicated official at a Director level to drive the processes related to BEE in the department.

Before I conclude, I wish to congratulate you and all those who were involved in the successful hosting of the premier defence show on the African continent – the Africa Aerospace and Defence Show of 2010. I had the previlage of meeting the Chinese delegation who had increased their stall from 2 in the previous AAD to 8 in 2010.It was with untold pride that I observed that despite its size and challenges, our industry stands shoulder to shoulder with its counterparts and I look forward to supporting you in all your future endeavours.

As I take my seat, please allow me to also thank all those who have worked tirelessly to make this day a success and I hope that at the end of today we will walk out of here less anxious about our collective future and more confident that we as a Department, are committed to a constructive and mutual beneficial relationship with you as an industry whose primary/sole reason for existence is the service of the DOD, SANDF and all the South Africans the length and breadth of our beloved country.



I thank you.