Budget cuts hit SA arms industry
THE defence industry in South Africa is in a crisis, says senior Armscor official André Buys.
The industry has been facing the onslaught of global competition while trying to manage severe defence budget cuts which have put a clamp on both government and private sector spending.
Buys says the industry has been in a state of decline for about five years with the rate of change enforced on the industry the real killer.
The state of the local defence industry is reflected in Armscor, the state procurement agency, having to cut capital spending on arms and equipment for security forces by R750-million last year.
"At the moment we are under severe pressure," says Buys. "We are stuck between budget restraints and the need to maintain a core defence capability."
Most of the state's capital budget was fed into maintaining an overstaffed SA National Defence Force, with personnel costs now claiming 60% of the available money, leaving very little for armaments purchases, says Buys.
However, government had said that it is planning to increase the amount of budget available for capital costs from less than 10% to 30% within three years by cutting back on troop strength.
The industry's shining hope is the planned R15-billion defence equipment shopping spree to replace and upgrade some of SA's ageing defence assets. The local industry is poised to benefit from the countertrade agreement which will feed money and technological expertise into South Africa.
Offers are being evaluated by the ministries of defence, finance and trade.
Buys says no announcement is expected in the immediate future. Top of page