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Defence Industry Strategy DEFENCE INDUSTRY STRATEGY VERSION 5.8 | MAY 2017 | STATUS: DRAFT This document is released solely for the purposes of public comment. All information herein is restricted to the purpose of providing inputs to this document. DISCLAIMER This document comprises background material and a draft defence industry strategy developed by the National Defence Industry Council (NDIC). As such, this document remains subject to changes following inputs received during further consultations and during the public comment phase. It is issued in its current form solely for the purposes of public comment and inputs. All technical and financial data has been taken from the appropriate official sources or provided by the companies concerned, and is considered to be accurate. It will, however, undergo further verification before the defence industry strategy is finalised. Issued for public comment by: Dr Sam Gulube Secretary for Defence and Chairman of the NDIC ____________________________ Date: 19 May 2017 i DRAFT DEFENCE INDUSTRY STRATEGY Version 5.8 May 2017 Enquiries and inputs may be directed to: Mr Trevor Mketi NDIC Secretariat: Director Telephone: 012 355 5579 Email: [email protected] ii TABLE OF CONTENTS DISCLAIMER .................................................................................................................... i PREFACE ......................................................................................................................... v ABBREVIATIONS & ACRONYMS .................................................................................. vii PART I: BACKGROUND .................................................................................................. 1 INTRODUCTION ......................................................................................................... 1 DEFINING THE DEFENCE INDUSTRY ......................................................................... 3 THE PURPOSE OF THE DEFENCE INDUSTRY ............................................................ 4 SOUTH AFRICA’S DEFENCE INDUSTRY: OUTLINE BACKGROUND ......................... 5 LOOKING FORWARD ................................................................................................ 11 MANDATE ................................................................................................................. 15 POLICY ...................................................................................................................... 17 DEFENCE INDUSTRY STRATEGY: KEY ASSUMPTIONS ........................................... 19 PART II: THE DESIRED END STATE FOR THE DEFENCE INDUSTRY .......................... 22 MEETING THE REQUIREMENTS OF THE DEFENCE FORCE .................................... 24 MEETING THE REQUIREMENTS OF OTHER SECURITY SERVICES & AGENCIES ... 29 ECONOMIC AND COLLATERAL BENEFIT ................................................................ 32 MEETING AFRICAN DEFENCE NEEDS ..................................................................... 34 AREAS OF COMPETENCE ......................................................................................... 36 KEY TECHNOLOGY DOMAINS ................................................................................. 38 INTERNATIONALLY COMPETITIVE .......................................................................... 40 INTERNATIONALLY INTEGRATED ........................................................................... 41 DEFENCE INDUSTRY OWNERSHIP .......................................................................... 42 PART III: THE CONTEXT FOR THE DEFENCE INDUSTRY ............................................ 55 OVERVIEW ................................................................................................................. 55 THE STRATEGIC CONTEXT ....................................................................................... 55 THE INDUSTRIAL CONTEXT ..................................................................................... 97 THE TECHNOLOGICAL CONTEXT ..........................................................................106 NATIONAL CONTEXT .............................................................................................120 iii PART IV: THE DEFENCE INDUSTRY OF THE FUTURE ...............................................130 OVERVIEW ...............................................................................................................130 DEFENCE FORCE DEVELOPMENT .........................................................................130 DEFENCE REVIEW: POLICY OPTIONS ....................................................................140 DEFENCE INDUSTRY STRATEGY: STABILISE AND SUSTAIN ................................142 DEFENCE INDUSTRY: TURN-AROUND AND DEVELOPMENT ..............................157 LONG-TERM SUPPORT FOR THE DEFENCE INDUSTRY .......................................166 DEFENCE FORCE ACQUISITION STRATEGY ..........................................................167 SUPPORT FOR INTERNATIONAL ENGAGEMENT .................................................181 DEFENCE TECHNOLOGY POLICY AND STRATEGY ...............................................183 INTELLECTUAL PROPERTY .....................................................................................187 GOVERNMENT SUPPORT TO THE DEFENCE INDUSTRY .....................................188 DEFENCE INDUSTRY CONSOLIDATION ................................................................207 FUNDING THE DEFENCE INDUSTRY .....................................................................210 THE DEFENCE INDUSTRY .......................................................................................215 DEFENCE INDUSTRY CULTURE AND VALUES ......................................................224 TRANSFORMATION ................................................................................................227 MEASURING SUCCESS ...........................................................................................229 iv PREFACE This defence industry strategy is based on the defence industry policy and strategy guidelines set out in the 2015 Defence Review, and is intended to serve as the framework for sustaining and further developing the defence industry. It will be supported by the Implementation Master Plan, which will detail the steps and mechanisms for implementing the defence industry strategy. The purpose of the defence industry strategy is threefold: To support the Defence Force and ensure a reasonable measure of strategic independence and freedom of action for South Africa, by meeting critical requirements of the Defence Force and ensuring sovereign control over certain vital capabilities; To provide South Africa with a useful tool of strategy and foreign policy; and To reduce the negative economic impact of defence spending by retaining funds in South Africa, creating employment and generating export earnings. The strategy document is rather longer than some might expect, including background material that those in the defence sector should find familiar. The reason for this is that it is essential for this strategy to be understood, accepted and internalised by other government departments, whose members may not have much knowledge of defence or defence industry issues. The document comprises four parts: Part 1 sets out the background reasoning as to why South Africa should have a defence industry and a brief outline of the industry’s present situation, as well as government policy and the courses of action open to government in respect of the defence industry. Part 2 sets out the ‘desired end state’ for the defence industry, as derived from the 2015 Defence Review, also taking into account the 1996 White Paper on Defence, the 1998 Defence Review, the 1999 White Paper on Defence-Related Industries and the 1999 White Paper on Science and technology. Part 3 provides the context within which the industry must be considered and within which it must operate, outlining South Africa’s strategic and vital interests, geostrategic trends, conflict in Africa and trends on conflict internationally. Part 4 sets out the envisaged strategy to sustain existing defence industrial capabilities and to lay the foundation for an expanded defence industry in the future. v The strategy will be accompanied by several annexures, which will address some matters in more exhaustive detail. In drafting this strategy, cognisance has been taken of the defence industry experience, policies and strategies of several other countries, drawing on both government documents and studies and articles prepared by industry bodies or written by individuals. While there are no direct parallels, there are some readily visible elements to be found in the experience and approaches taken by several other governments that are equally relevant to South Africa, and those concepts have been duly adapted and incorporated. vi ABBREVIATIONS & ACRONYMS AAM Air-to-Air Missile ACIRC African Capability for Immediate Response to Crises AMISOM African Union Mission in Somalia APC Armoured Personnel Carrier ASF African Standby Force AU African Union BBBEE Broad-Based Black Economic Empowerment BREXIT British Exist from the European Union BRICS Brazil, Russia, India, China, South Africa BVR Beyond Visual Range (missile) CAD Cybicom Atlas Defence CAR Central African Republic COMINT Communications Intelligence COTS Commerical off the Shelf (i.e. equipment from the civilian sector) C-RAM Counter-Rocket, Artillery Mortar (base defence system) CSIR Council for Scientific and Industrial
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