South Africa’s National Industrial Participation (NIP) programme has generated investment and sales credits valued at $3,5-billion during the past eight years, says the Department of Trade and Industry.
This translates into about R23-billion at the current exchange rate.
Deputy Director General of Trade and Industry Lionel October — who is in charge of enterprise and industry development — told parliamentarians serving on the trade and industry portfolio committee that South Africans have benefited from the investment “as a consequence of the country’s strategic defence procurement [arms deal] programme and other government purchases”.
He noted that the NIP programme arose as a result of the defence programme entered into by the government in 1997, with the majority of the projects beginning in 2000.
The total amount includes investment credits estimated at $1-billion, with export and local sales, technology transfer, black economic empowerment (BEE), and small, medium and micro enterprises promotion making up the balance, he said.
Referring to the offset programme, he said partnerships projects range from the local manufacture of galleys for the Airbus A319 and A320 to the production of cockpit modules for the BMW 3-series for export purposes.
“The BEE component has seen a South African company being awarded the contract to print the owner manuals for the Mercedes Benz C-Class right-hand-drive models assembled in South Africa.
“These manuals will be distributed internationally, as the vehicles are exported to countries which use right-hand-drive vehicles,” he noted.
In a statement, Minister of Trade and Industry Mandisi Mpahlwa said 8 000 new work opportunities have been directly created and 134 new projects approved, across the country, as a consequence of the NIP programme.
it is “a welcome sign that the targets set for 2011 are realistic and will help achieve some of the country’s broader socio-economic goals”, the minister said.
There are two elements to the industrial participation programme in South Africa — a defence and a non-defence component.
The Department of Trade and Industry manages the NIP, which becomes obligatory when the foreign content of the procurement, purchase or lease contracts of government departments and parastatals exceeds the threshold of $10-million “in which case an NIP obligation of 30% on the foreign content will be attracted”.
Total NIP obligations over 11 years were about $15-billion, of which $13-billion arose out of the arms deal. About $800-million arose out of purchases by South African Airways, with the rest from purchases by Telkom, Eskom, Transnet and national and provincial government.
BAE/Saab and Thales — both involved in the arms deal — have achieved 100% of their investment target. Agusta and the German Frigate Consortium have achieved 70%, while the German Submarine Consortium (GSC) has achieved 82% of its target so far. The department has acknowledged that the latter two entities may not meet the agreed offset targets.
MAN Ferrostaal is working on projects on behalf of the GSC. Among the projects are the resuscitation of the Magwa tea estate in the Eastern Cape and the Hosaf PET recycling plant. This recycles plastic bottles to produce polyethylene terepthalate (PET) granulate — a form of polyester.
Among BAE/Saab projects is a jewellery-manufacturing sector gold-advance scheme. Together with AngloGold, Ashanti, Gold Fields and Standard Bank, it has established a gold-financing facility to stimulate the South African jewellery industry. The gross value of sales is estimated at a potential $90-million a year.
The German Frigate Consortium has through ThyssenKrupp funded a number of projects, including the development of an insulated panel system for building houses.
Thales is involved in a number of projects including facilitating a financing package to support the Industrial Development Corporation’s strategy of funding small and medium-sized enterprises. Thales Telematics SA — a subsidiary of the Thales Group — has been selected to become the global headquarters for Thales’s international customer services, alarm-response and order-fulfilment operations.
Thales is also involved with Tenesa Manufacturing in manufacturing photovoltaic modules that produce electricity when exposed to the sun. It is based in Cape Town, the NIP programme 2005 report says. — I-Net Bridge