The government should do more to publicise the benefits of the industrial participation or "offset" projects that have arisen as a result of the Strategic Defence Package (SDP), David Botha*, a consultant at the Institute for Security Studies (ISS), told a seminar on Tuesday.

The $3.9bn SDP contracts, were signed on December 3 1999. The package consisted of four corvettes, three submarines, 28 Gripen fighters, 24 Hawk trainers and 25 Augusta A109 light utility helicopters.

The contracted offset value is $16.3bn or more than four times the SDP value.

It is the largest arms deal ever signed by the South African National Defence Force (SANDF), but equivalent to monthly cost of keeping US troops in Iraq for a single month.

At the end of March 2003, the Defence Industrial Participation (DIP) projects amounted to 26.5% of the total DIP and was at 106% of schedule after three years, with four more years left.

Orders have been placed with 38 companies and the estimated work content was 3.6 million man-hours.

The National Industrial Participation Programme (NIPP) part of the offset, which covers industrial projects not directly related to the arms deal, has seen 45 projects approved with a value of $6bn or over 40% of the contracted value of $14bn.

"These projects are significant projects with important capacity enhancing benefits for the whole economy. What I do not understand is why the government is so silent on the benefits of the arms deal, given all the flak it has taken about alleged corruption.

"I think the government communications unit should do far more to publicise the benefits of the arms deal, but I guess good news does not sell as well as bad news," Botha said.

South Africa broke the one trillion rand annual nominal gross domestic product (GDP) barrier during 2002 as the nominal GDP reached 1.098 trillion rand.

When the African National Congress became the ruling party in 1994, the annual GDP was less than half that at R482.199bn.

The doubling since 1994 is largely due to inflation, but there has also been consistent growth, with not a single year since 1994 showing a contraction in real terms.

[But with the real inflation prevalent in SA at about 15% per annum, there is devaluation of about 50% every five years. So after ten years, the annual GDP should be R2 trillion, not R1 trillion - the spin! the spin!]

In May this year, South Africa entered its longest "upward economic phase", as the previous longest upward phase lasted from September 1961 to April 1965. The current upward phase started in September 1999.

The estimated job creation from the arms deal in both direct and indirect activities is estimated at 60 000, while the revenue generated by the offset activities and linkages is estimated at more than R200bn.

* [Dawid Botha was previously a senior manager at Armscor and later an executive director of Altech Defence Systems (ADS).] 

With acknowledgements to Helmo Preuss and News24.