Aerospace and Defence Industry
About the Sector
The South African aerospace and defence industry has followed a path aimed at developing indigenous products and technologies, resulting in the establishment of a wide scope of capabilities and associated infrastructure required for complete product integration. Entry into the global market and supply chains has necessitated increased competitiveness and new technologies. Progress has been made by South African firms that have developed a track record of innovative, technical solutions, strong capabilities at the systems and subsystem integration level, and on-time delivery schedules to global Original Equipment Manufacturers (OEMs) such as Airbus and Boeing.
The industry itself has proven to have a competitive advantage in the manufacturing of major and minor sub-assemblies. This has led to the industry to be well-integrated in the global supply chains both for aerospace and defence-related solutions. In addition, South Africa has a track record of producing full aircraft and complex aircraft systems, from the Rooivalk helicopter and general aviation aircraft such as the Sling to building aircraft under licence, such as the Dassault Mirage. The industry supports a number of high-skill jobs, which contributes to the expansion of the national science, engineering and technology base.
Key constraints
- Absence of a coherent national defence procurement strategy in which government departments (the dti, DPE, DST, DoE and DMR); organs of state (IDC, CSIR and defence testing centres); and National Champions (Denel and Armscor) should be participants.
- The primary risk facing the industry is the continued underfunding of the Defence Force, which restricts its ability to acquire new equipment and systems and its ability to support new research and development. While several companies have done well in the export market, much future potential will be lost if the industry does not have new products with which to compete.
- The second greatest risk lies in export controls that are both slow and erratic. This can discourage repeat orders and even deter potential clients.
- There is also limited government support; politically and diplomatically, industrial and financially. The complexity of the industry has led to funding institutions such as the Industrial Development Corporation (IDC) unwilling to finance it.
- Efforts from foreign countries that use sales of arms at friendship prices and even donations of arms as a means of buying influence in Africa and other developing nations, and in some Central European powers dumping equipment from their large Cold-War-era holdings.
Key opportunities
- Development and production of equipment suited to national geographical characteristics and state of affairs targeted for domestic use, African continent and other markets.
- Positioning the local industry as a one-stop-shop that provides defence solutions for the African continent and as preferred African partner. In the international markets, the appearance should be that of the desired “Team South Africa Inc.”.
- Maintenance, refurbishment and overhaul of aerospace and defence products.
- Development of a national flagship project such as Small African Regional Aircraft.
- In addition, it has successfully entered the global market through its exports and global partnerships with many of the world’s leading aerospace and defence OEMs and tier 1 companies
Progress highlights
- The South African government entered into aBilateral Air Service Agreement (BASA) with the United States in 1955 and amended it in 1984 with no implementation procedure (IP). The two countries have indicated intent to review the current BASA to include an IP. Several discussions and documents have been exchanged between the countries to facilitate this process. The IP will unlock channels of trade in a range of aviation safety arenas, including design, production, flight operations, environmental certification and maintenance.
- The Defence Industry Fund (DIF) was launched in July 2018. The rationale behind the DIF is to enable the growth of the South African defence industry, developing what are mostly small and medium enterprises into internationally competitive industries with the ability to compete locally and supply the South African National Defence Force’s equipment and supply needs – as well as expanding the broad-based black economic empowerment strategic imperatives of the industry.
- The National Conventional Arms Control Committee (NCACC) approved the implementation of enhancements to the computerised permit systems, resulting in two-way import/export permits being issued to applicants, minimising the approval process and turnaround for products that are critical and under repair.
- The defence charter was gazetted in 2018, meaning that all entities operating in the South African defence industry, in its entirety, including national or provincial departments, state-owned and private enterprises will, from the date of gazette of the sector code, be measured according to its provisions.
Contact Details
Ms Nokwanda Fipaza
Director: Aerospace and Defence
Tel: +27 (0)12 349 5567
E-mail: NFipaza@thedti.gov.za
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