NEWS ANALYSIS: Exports keeping local defence industry alive as state spending stalls
Huge future challenge is training of next generation of skilled technicians and engineers, warns analyst GOVERNMENT contracts are the lifeblood of any defence industry but as the economy stagnates and state spending narrows, local companies will have to rely more heavily on exports.Hopes had been placed on the implementation of the Defence Review to boost the sector; however, the fiscal squeeze is likely to see this delayed. The 2016-17 budget, to be announced in February, could see more reductions in the capital spending of the South African National Defence Force (SANDF).The lack of capital spending by the defence force has a long history. It has only been through exports that state-owned Denel and private sector group Paramount, which together are estimated to constitute about 70% of the industry, have been able to keep going. Paramount has focused on building partnerships with foreign governments and derives 95% of its revenue from exports, while this is 52% for Denel. Denel’s a...
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