Armscor ranks companies as total of payments to local firms hits R1,6bn

THE defence ministry has given rankings to companies that have delivered on their defence industrial participation commitment as part of SA's R43bn arms deal.

Government's arms procurement agency, Armscor, awards credits or points to the companies in recognition of payments received by SA manufacturers in respect of their work.

At the African Defence 2001 Summit in Johannesburg yesterday, deputy Defence Minister Nozizwe Madlala-Routledge said French defence and industrial electronics group Thales led the pack, having delivered 27% of its commitment.

Arms manufacturer BAE Systems and Swedish firm Saab are second, according to Madlala-Routledge, with their 13,6% industrial participation commitments on the Hawk and Gripen.

She said the two firms had "placed contracts and subcontracts to the value of R7,9m with SA companies".

Madlala-Routledge said Agusta the Italian firm had discharged 1,3% of its industrial participation, and the Corvette and Submarine Consortium 9,7%.

She said the total value of defence industrial participation agreements to date was R1,6bn.

Madlala-Routledge outlined the bleak climate in the defence industry worldwide since the end of the Cold War, saying it had caused a 70% decrease in defence equipment investment. SA, she said, was recasting itself in line with international trends.

"As said previously, there must be life after the packages."

She said the domestic industry was working in collaboration with international companies and the defence department to find cost-effective and innovative solutions to their "other strategic requirement".

Madlala-Routledge also gave details of the equity some black economic empowerment companies held in the defence industry, and described this as progress.

Progress was made, she said, since the elections in 1994 when no black people held equity in defence companies.

According to Madlala-Routledge, Kunene Brothers held a 63% stake in Kunene Technologies which has a 58% share in Grintek "one of the largest defence-related companies in SA".

She said Futuristic Business Solutions and black economic empowerment groups held 40% of African Defence Systems shares.

An investment holdings company, Kgorong, holds 30% of the Reutech Radar Systems shares, while black empowerment group, Primgro has a 25% stake in Tellumat Holdings.

Madlala-Routledge warned that any new defence industrial participation-related business "must be economically viable to ensure sustainability".

At the summit, Gen TT Matanzima said the current defence commitments ordered by government and defined in policy, exceeded the defence budget.

Matanzima was delivering his speech on behalf of SA National Defence Force chief, Gen Siphiwe Nyanda, who is in the People's Republic of China.

Said Matanzima: "There is a risk of the deterioration of the conventional fighting capabilities of the SA National Defence Force to such a level that it will be unable to provide defence as required by the constitution."  

With acknowledgment to Bonile Ngqiyza and Business Day.