Seperatists say there will have be no peace on the coast until it has been granted independence.
While state-owned defence dominator Denel goes through challenging times, the private defence manufacturing sector seems to be thriving, with collaboration as the solution for putting South Africa on the world stage and reaping spillover benefits from investment into the sector.
Ivor Ichikowitz, executive chairman of the Paramount Group, says the local defence industry is surprisingly capable and diverse, and is undergoing a rapid change in response to the ever-changing realities.
"To ensure a brighter future it is increasingly important that the individual companies, especially the leaders in the field, enter into more collaborative arrangements in the broader interests of the industry and the country."
Paramount, which was started after a state sell-off of assets and now claims to be the largest privately-owned aerospace and defence company on the continent, is open to co-operation with both state-owned and private companies in a "mutual effort to allow the industry to reach its full potential, and contribute its appropriate share to South Africa's industrial growth".
Ichikowitz says the benefits of a functional defence industry go beyond military applications, because many products and services have useful civilian purposes such as being highly innovative as well as a training ground for high-end engineers across a spectrum of disciplines.
State defence must work with private sector
Yet, says Ichikowitz, when government refers to the defence sector, it seems "limited to the state's activities", which "seems to struggle to be viable" and, while "continuing to shed jobs, relies on bailouts".
This month, Denel issued a statement arguing that it is a strategic national asset with a strategy of focusing on revenue growth, cost optimisation, productivity improvement, leadership and transformation.
"The company is playing an increasing role as a high-technology manufacturer, while at the same time contributing to meeting the national developmental objectives of skills development, youth development and job creation."
Denel says it has a growing footprint in key export markets, although its primary mandate is to provide the South African National Defence Force (SANDF) with strategic technology capability, products, services and support.
Denel says it aims to expand stakeholder relationships and work together with other players to create a strong, viable and sustainable defence industry. In its latest annual report for 2012, chairman Zoli Kunene said, "considering that Denel has been operating under difficult conditions, both locally and internationally, it is pleasing that Denel has posted a marginal profit of R41-million."
He noted that Denel continues to successfully manage operations, despite limited cash flows.
Denel confident
Denel says it is confident about its performance, which will be reflected in the next financial results.
"We are confident that our performance will be even better than our initial expectations. Denel is indeed on track to achieve revenue growth, cost optimisation, productivity improvement, leadership and transformation."
Ichikowitz says, in contrast to government's assets, the private sector is profitable, growing and is a net contributor to tax revenues.
"This situation is clearly unsustainable," he says, adding that this is why he has been calling for a complete reorientation of the industry in South Africa.
Paramount's view is that it should be working much more closely with Denel to put the industry on a more rational basis, and "build it together as a profitable and valuable enterprise for the country," says Ichikowitz.
In her recent budget vote speech, Defence and Military Veterans minister Nosiviwe Mapisa-Nqakula said the continent has enough resources that can be shared for common prosperity, security and human development.
"The biggest threat to the ability of the continent to harness this potential is instability, poor governance and war. The situation of war has made it possible for our resources to be plundered for the benefit of other economies outside the continent.
The continued plundering of these resources is a direct threat to our future food security and survival. It is for this reason that we will continue our engagements in support of peace and stability in the continent."
Challenges facing Africa's security
There are challenges weighing on the sector, such as an ageing workforce and the need to remain competitively effective.
Mapisa-Nqakula said the military is expected to develop capable leaders with a high level of discipline and sense of duty and the defence force actively recruits young people through the military skills development system and the university reserve training programme.
"We seek to increase partnerships with tertiary institutions to train defence force members and recruit talented students, especially in technical fields."
Ichikowitz says although Paramount has world-class engineers, designers and innovators, their average age is higher than it would ideally wish. The group's internship programme is taking shape, and it plans to train a new generation of technical experts under the guidance of its most experienced people.
Denel notes that in its most recent financial year it spent R46-million on skills development. It has set up several initiatives, including an engineering bursary scheme and the Denel Technical Academy.
Its Saturday school initiatives are ongoing, providing financial aid as well as tutoring and mentoring in science and mathematics to high school learners.
The biggest challenge is to remain globally competitive, says Ichikowitz.
"That requires constant research and development, new manufacturing techniques and creative thinking on the part of all involved…The defence industry is one of the most competitive and we have to stay ahead if we wish to stay in business. It is a challenge we welcome, and make every effort to meet every day."
Opportunities for growth in private sector
South Africa's membership of Brics opens up new avenues for industrial co-operation with other member countries, says Ichikowitz. He says Paramount's primary market has traditionally been and remains Africa, but it has been expanding its interests in other continents, and has become a global business.
This has helped it expand its range of defence-related products and services, allowing it a bigger portfolio and a wider range of customers, says Ichikowitz.
"Our growth has been rapid in recent years, and that comes with its own challenges and opportunities."
Ichikowitz adds that the group understood from the start that it could only succeed if it could compete on the world stage, and does not rely on orders from the SANDF.
"In fact we do no business with the South African government."
Many opportunities in Africa are not sufficiently lucrative for the world's large defence conglomerates to have much interest in, especially if it means they are not likely to sell a lot of very expensive equipment, he explains.
"Africa is certainly a growing market for us. The continent has made great strides in recent years, with greater democratisation, better governance, and more stability coupled with expanded economic growth.
"Legitimate governments have a responsibility to their citizens to maintain law and order, defend the country from those who threaten their newly-established democracies, and participate in stability operations intended to keep the peace on the continent.
"Their growing economies also mean more capacity to equip and train their personnel, and this trend seems likely to continue, meaning the African market will become more lucrative in the years ahead."
In June, South Africa and South Sudan, Africa's most recently-created country, signed a declaration of intent to work towards formalising relations between the two countries in the areas of defence — the first step towards working on a defence memorandum of understanding since the birth of the new country South Sudan.
The sector is expecting the release of the defence review very shortly and is awaiting feedback on whether the committee, led by Roelf Meyer, has new ideas or suggestions around the industry's future. Mapisa-Nqakula says the review has been completed and submitted for Cabinet's approval.
"The finalisation of the defence review has already taken into account some of the weaknesses in our design, tactical planning, legislation and operational requirements that led to these challenges."
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