Ready, aim ... not quite firing
Local arms industry must join forces, says exec
South Africa’s arms industry is showing signs of a change for the better, but there remains room for improvement to muscle back into the international market. Local companies will need to adapt to compete, according to one industry executive.
The international market has changed with wars in Europe and the Middle East and the nature of war has changed too. Wars are no longer only conventional; armed drones, electronic disruptions and armoured vehicles with greater mobility are among the changes.
The local industry, with its reputation for excellence in making heavy mine-protected vehicles, missiles, ammunition and related products, will need to change along with it.
But there has been a significant brain drain to the Middle East in particular and local manufacturers will need to adapt for the future or die, says Stefan Nell, group MD at OTT Group of Companies.
Recent figures from the National Conventional Arms Control Committee (NCACC) indicate that arms exports from South Africa increased from R4.6bn in 2022 and R3.3bn in 2021 to R4.9bn in the first three quarters of 2023.
This has happened despite state-owned arms company Denel still struggling and delays by NCACC.
The increase is “miraculous”, says Sandile Ndlovu,
CEO of the Aerospace, Maritime & Defence Industries Association.
According to the Stockholm International Peace Research Institute, South Africa has captured 0.3% of the global armaments market. Yet the value of its exports has increased by 6.7% from 2013 to 2022. The best customers between 2018 and 2022 were the UAE, the US and India. The biggest exporters of arms to Africa in that period were the US, Russia, France, China and Germany with 76%.
Nell says his group delivers 0% to the local defence market and all its orders are from abroad. With state procurement company Armscor placing few orders for the South African National Defence Force, the remaining few manufacturers source work from abroad. Nell says joint efforts by the local companies are the only solution to gain a foothold abroad rather than each competing for the same contracts.
For example, 22 different companies are competing for a yet-to-be-issued military vehicle tender in Malaysia. Türkiye won a contract from Saudi Arabia for 400 vehicles after South African manufacturers spent millions to market their products for the same opportunity.
“Countries want the production of the orders to take place on home soil with technology transfers from manufacturers abroad,” says Nell. “If you are not prepared to adapt your business model accordingly, you will not be in the running.
“We recently had a delegation from the Middle East. After presenting our vehicles and demonstrating them, the response was: ‘We do not want any of your vehicles, we want you to teach us how to design and build our own vehicles in our own country,’” Nell says.
Project Hoefyster to supply the army with 264 Badger infantry fighting vehicles stalled in 2019 because of a dwindling defence budget and Denel’s demise due to state capture. The project was recently revived, but for only 88 vehicles.
Nell says it is ironic that armoured vehicle maker LMT
now part of the OTT group whose engineers and artisans did most of the designs and specialised welding on the Badger, still work for the group. All offers of assistance to Denel have been rebuffed.
“We cannot operate in silos. The local capability is just too insignificant compared with that of the big international players,” Nell says.
“Only joint efforts will provide cost-effective solutions and when you compete internationally, competitive costing is crucial.”
He says the industry also needs government support, such as that between Saudi Arabia and Türkiye.
“We need to be even more innovative than we are known for. You have to remain one step ahead of your competition but we are lagging.
“We lost some of our most experienced specialists when the local industry all but collapsed yet there remains a lively interest from young engineering students in the arms industry. We should use their fresh ideas and capitalise on it.”
Defence analyst HelmoedRömer Heitman says the NCACC must support the industry rather than frustrate it, and it also needs government support.
“In March 2016 the National Defence Industry Council was established to develop a strategy for the whole industry by November the same year. Since then the council has basically done nothing and achieved nothing.”
He urges the arms industry to revert to the defence department rather than languishing in state-owned enterprises. “There are too many decisionmaking bodies and too few focused efforts, but for that you need proper government support and a national will to succeed to the benefit of the country,” says Heitman.
We need to be even more innovative than we are known for
Stefan Nell