Issued by: Ministry for Public Enterprises
Pretoria 26 September 2000
Today's release of the audited financial results of Denel is another very significant event in the life of this important SOE. Denel dominates the high-technology defence-related industries in South Africa and in many ways is the flagship of the industry in South Africa. To some extent it has suffered from under exposure, in the past, and the public's. view of the organisation has been limited to the impressive display of its products at various shows. You are all aware of the extremely successful Africa Aerospace and Defence 2000 exhibition held recently at Waterkloof Airforce Base. Those of you who were able to attend would have noticed the massive Denel display and I am very pleased with the reports that I have received concerning the heightened interest in the company expressed by a number of countries and international players in the industry.
Transparency means many things, and is a particularly sensitive and necessary element for defence-related industries that operate in a democracy and which are informed, guided and wholly committed to the principles and practice of government policy. The release today of Denel's financial results in this manner allows an appreciation of the company's profile to extend more broadly than has been the case before. To the unwitting, the results could send confusing signals, and so I wish to emphasise, from the side of government how we interpret the company's performance and its role today.
South Africa's arms industry has a long and fairly complex history, stretching as far back as the inter-war period. However, its main growth and consolidation took place after the rapid expansion of the apartheid state's defined security interests in the atmosphere of the global Cold War environment and a regional context of conflict and the regime's attempts to build a cordon sanitaire in southern Africa through its involvement in the wars in Namibia, Angola, Zimbabwe, Mozambique and other frontline states . For many people, the fact. of the industry's active collusion in those conflicts, its sanctions' busting past, and its direct links to the apartheid regime are sufficient reason to dismantle and break up the industry today. Those arguments are underpinned by a larger vision that wishes to see an end to global conflict through outright disarmament and an end to weapons development worldwide.
Our perspective in government takes note of these concerns, but we emphasise that we need to approach the defence-related industries from the perspective of transformation within a realistic assessment of both the international and regional contexts. Here we argue that the massive historical investment by South Africa into its defence industries must be put to good effect in terms of policies and programmes that are now governed by commitment to democratic ideals, international peace and security and the sovereignty of nations. Over the last few years, the South African industry has undergone a major transformation in the manner in which it works, markets itself, how it relates to government's foreign policy, and most importantly, how it fits into the strict regulatory regime that government imposes on the industry. These are all innovatory mechanisms and the industry continues to adapt to the new situation.
The industry has also benefited enormously from South Africa's rejuvenated international status brought about by our admission to the international community of nations. Often this has been interpreted narrowly with emphasis on the increased marketing and export potential of the industry. But there is another perspective that we should not forget, and that is the ability of the industry to interact positively with international Research and Development trends that now emphasise alternatives to weapons of mass destruction, anti-personnel weapons such as landmines, and oven non-lethal weapons development. Furthermore, the industry has moved rapidly to engage higher precision and performance in an attempt to remove the random element from warfare. South Africa has the expertise and capacity to participate fully in there developments and out industry does so, fully aware of the requirements and restrictions of the international conventions we as a country subscribe to, such as the Geneva, Conventions of 1949 and 1977, and the measures to eliminate, weapons of mass destruction, biological and chemical weapons and various groups of antipersonnel weapons.
At the same time, modern trends emphasise, quite. correctly, that the fives and well-being of military personnel must be protected and secured. Hence, R+D into amour protection, detection systems, and various defensive weapons systems is critical. Here again South Africa, particularly in the area of mine-protected vehicles and other countermeasures, has much to offer, But the hard fact is that we can only remain at the forefront if we remain within a military context. It would be criminal indeed, if we as government were to act in manner that would effectively throw the baby out with the bathwater.
Hence, as I emphasised at the Africa Aerospace 2000 Expo, the South African government remains committed to supporting and promoting our defence-related industries as reservoirs of exceptional expertise, producers of outstanding quality, and as innovators in a highly competitive environment. At the same time, modern trends indicate that no country can go it alone any more - even the USA has developed a system that sees more and more defence-related work being done by non-USA companies. Hence, we have pursue d the route of securing appropriate strategic equity partners for our aerospace and ordnance divisions primarily. We are on the brink of making further announcements in this respect as well, so I will not provide more details on this aspect today.
We have also developed a more mature approach to our industries relationship to international markets. Recently Denel has built on past relationships, so that we will now move beyond being merely a trader in weapons systems. Henceforth, we will emphasise the transfer of technology and technical training, joint production of specific terms, and cooperation on joint research and development, This approach is not unique to any one country either and is now integral to all our international endeavours. Within the African context, this means that we will be able to enhance, our own capacity as well as concentrate on African solutions to African problems. This is a very exciting and challenging situation for us, and one that we approach soberly and with requisite caution.
The tables, facts and figures that have been presented here emphasise that the company has made significant strides in the past financial year, Coupled to important changes within the internal business organisation and various restructuring initiatives as outlined, area number of critical developments, These include the revamped marketing and export drive that has already produced interesting results. Also, governments intention to restructure the company emphasises the SEP route as a means to add managerial muscle, investment and increased marketing, and technology transfer and development. We have been, impressed with the interaction between Denel and the new structures that have emerged within the industry in Europe in particular, and are also pleased at the way in which the company has also extended its horizons into other areas. In particular, we believe that the foundations that have now been laid are solid, and that the future of the company is secure.
I would like to take this opportunity to thank the Board and management for, the manner in which they undertaken difficult tasks. The employees of the company deserve enormous credit for staying in their stations during what, has been a difficult few years when morale became a problem as a result of the uncertainties in the market place. I foresee a situation when, with the increased involvement of Denel in a number of major projects, including the offset programme of the Defence Packages, becomes a major source of new employment, both direct and indirect, in our economy. Already, for example, one if its divisions, Naschem, is the largest employer outside of government itself in Potchefstroom.
My congratulations to all and although there is still much to be done and not sufficient yet for anyone to rest on their laurels, I believe we are on the way to a bright future.
I thank you.