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South African Defence Industry Strategy 2020

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South African Defence Industry Strategy 2020 South African Defence Industry Strategy 2020 PART TWO The Defence Industry: Desired End-State 21 PART TWO THE DEFENCE INDUSTRY: DESIRED END-STATE OVERVIEW 70. Vision: A globally competitive and integrated defence industry that supports national interests, and that is the preferred choice for defence related solutions on the African continent and a recognised option for other armed forces. 71. Mission: To develop and sustain an effective defence industrial capability based on synergy between government and private role players, capable of meeting the needs of the Defence Force and other clients, and growing beyond the borders of Africa, while supporting the national development and transformation agendas. 72. Objectives: a. Provide sustainable military capabilities for South Africa, with particular focus on capabilities deemed sovereign or strategic. b. Enhance the ‘country brand’; ‘Team SA’ advancing the economy through the design and export of local technologies and focused capabilities. c. Support the national development and transformation agenda. d. Develop strategic science, engineering and technology skills and capabilities. 76. The Defence Review sets out the capabilities required of the defence industry1 to enable it to support the Defence Force effectively and efficiently, which can be considered to be the ‘desired end state’ to be achieved by this strategy within the period covered by the Defence Force ‘Milestones’ set down in the 2015 Defence Review. 77. In addition, the defence industry should be capable of: a. Meeting most requirements of the Police and Intelligence Services and agencies with safety and security functions. b. Meeting some requirements of disaster relief and emergency services. c. Being integrated into South Africa’s wider industrial development. d. Helping expand the national science, engineering and technology base. e. Helping expand the technical and technological skills base; and f. Making it possible to leverage industrial, economic and social gains from defence expenditure. g. Competing internationally in selected fields. h. Becoming internationally integrated as a supplier to international groups and as a development partner to some, to gain insight and technologies as well as to provide greater and more stable turnover. 78. Against this background, the aim is to secure, stabilise, sustain and then develop the defence industry to deliver these capabilities and goals: 1 Defence Review 2015, Chapter 15. 22 a. Secure: i. Identify capabilities and capacities deemed essential that are at risk of being scaled down or lost, and move urgently to secure them by: 1) Providing urgent relief funding to sustain them in the immediate future; and 2) Placing orders to ensure the minimum throughput required to sustain them into the medium term. ii. Identify capabilities and capacities deemed essential that have been lost but can be regained, and move urgently to regain them by: 1) Providing the funding to re-establish them; and 2) Once re-established, placing orders to ensure the minimum throughput required to sustain them into the medium term. b. Stabilise: i. Establish inclusive collaboration between government and private sector players on both the strategic and operational level. ii. Develop a long-term defence acquisition strategy to smooth defence acquisition flows and ensure sustainable workloads. iii. Develop the agility and resilience to respond to changing trends in warfare, in evolving and emerging defence technologies, and in the defence industry internationally. iv. Drive the ‘Team SA’ country brand, cutting across the defence industry. c. Sustain: i. Establish strategic partnerships that provide sustainable sovereign and strategic defence capabilities. ii. Support exports and also joint ventures and partnerships with defence companies and groups in other countries. iii. Support the national development agenda by increasing and widening industrialisation and facilitating access to the industry by designated groups. iv. Develop sustainable and optimised multiple funding streams. d. Develop (when the required investment becomes practicable): i. Revitalise the industry to contribute a marked percentage of the GDP. ii. Become the preferred provider of defence equipment and capabilities on the African continent. iii. Become a supplier of choice internationally in identified niche areas. iv. Be supported by foreign policy in respect of the export of local technology and defence equipment and capabilities. 79. Related priorities for government and the defence industry include: a. Increasing the positive impact of defence spending and making that visible; b. Encouraging and improving local participation in the defence industry; c. Creating employment opportunities and increasing skills development; d. Encouraging innovation within the defence industry; e. Prioritising industrialisation and commercialisation of defence-related products; f. Attracting local and foreign direct investment into the defence industry; 23 g. Establishing, developing and nurturing SMMEs and cooperatives as future employers2; and h. Increase local investment in sovereign and strategic capabilities to enhance national security. MEETING THE REQUIREMENTS OF THE DEFENCE FORCE 80. The primary purpose from the point of view of the state for having a defence industry is to ensure that the Defence Force is kept well- and appropriately equipped, together with effective support and sustainment of its equipment and systems, to ensure that: a. South Africa attains and retains a practicable measure of strategic independence and freedom of action; b. South Africa attains and retains sovereign control over identified key capabilities and technologies3; c. The Defence Force is provided, as far as is practicable and cost effective, with equipment optimised for its needs; and d. South Africa is in a good position to assist, support and collaborate with allied and friendly states in defence equipment; e. While at the same time increasing the positive economic impact of defence spending by leveraging it for job creation, skills development, industrial capability expansion and by means of defence exports bringing foreign currency earnings. Strategic Independence 81. Strategic independence is defined by the 2015 Defence Review4 as “the ability of the Defence Force to perform its key functions for extended periods without reliance on direct foreign support in respect of critical5 capabilities”. The specific capabilities that fall into this category will be determined by the Defence Force, on the basis of an agreed Military Strategy and Capability Reference Model and the resulting force design, and which will then determine the relevant industrial capabilities. 82. The point is to have sufficient inherent defence capability to give government freedom of strategic action in South Africa’s interests where those may not coincide with the interests of one or more major powers.6 83. For this to be possible, the industry must7 “have the capability to: 2 A recent World Bank study showed that in Africa SMMEs generate up to 45% of employment and up to 33% of GDP. Given the low start-up cost and in most cases the low initial skills requirements, this makes SMMEs an extraordinarily efficient means to achieving economic growth and greater economic equality. 3 To be identified by the Defence Force, in conjunction with the intelligence services and drawing on the advice of Armscor as to what is practicable. 4 Defence Review 2015, Chapter 15, Page 15-3. Paragraphs 14, 15 and 16. 5 ‘Critical’ here refers to capabilities, systems and equipment without which the Defence Force would not be able to prosecute operations vital to the interests of South Africa. 6 The Brazilian government has described this as “the power to say no” to a major power. 7 Defence Review 2015, Chapter 15, Page 15-3, Paragraph 14. 24 a. Support, maintain and repair and overhaul (MRO) critical8 equipment and systems efficiently and cost-effectively. b. Adapt or modify equipment and systems to deliver performance advantages over opposing forces, by means of classified algorithms; for instance, secure mode IFF9 systems, encrypted radio communications, electronic counter-countermeasures for radar systems. c. Manufacture critical munitions and batteries. d. Manufacture such high-rate-of-use spares, components and sub-assemblies that cannot be: i. Stockpiled in sufficient quantity; ii. Brought into production at short notice without direct foreign assistance; or iii. Acquired from multiple foreign sources via multiple channels to negate an embargo by one or more government”, or to assure availability in the event of a crisis that has raised demand for such items in one or more countries. 84. Strategic independence further means having10 “the ability to: a. Conduct operational research and research and development across the spectrum of Defence Force responsibilities, in order to: i. Fully understand new potential threats, evolving and emerging technologies, materials and processes, to be an ‘intelligent buyer’ and ‘smart user’; and to ii. Fully understand the details of systems, subsystems, equipment, software and components that may be acquired from foreign sources; b. Comprehensively and thoroughly test and evaluate equipment, munitions, systems and other defence materiel to a standard that ensures that items acquired by the Defence Force fully comply with the requirement and the related specifications, including aspects such as reliability, availability, maintainability and durability (RAM- D);
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