22 February 2002
Distinguished Guests Ladies and Gentlemen
Allow me at the outset to express my appreciation for this opportunity to address such and important and distinguished group of defence industry leaders, administrators and officials in India. The South African delegation as a whole, and my colleague Minister of Defence Lekota and myself in particular, have been delighted with the hospitality we have received at the hands of the Indian Government and CII. The exceptional interest shown in the South African stand at DEFEXPO India – 2002 is greatly appreciated.
Since 1994, India and South Africa have made tremendous progress building government-to-government and country-to-country relations in cultural, political, trade and defence relations. With our return to the international community, we have been able to build on the strong people-to-people relations that have existed between our countries for decades. Today we cooperate in a range of international forums, and discuss many issues of importance to security and peace with other states. As independent and proud nations, we prioritise our domestic needs of security through development, and attempt to engage international challenges by encouraging all to abide by international law, regional cooperation and peaceful endeavour. Recent events have surely emphasized that the post Cold War world is a complex, volatile and potentially dangerous place. Whilst none of us should underestimate the challenges that securing world peace would entail, neither should we ignore opportunistic dangers wherever these may appear. In this context, the security of people, tied up as it is with their physical well-being, must demand that all agencies of the state should be able to fulfill particular tasks.
Minister George Fernandes, in his opening remarks at the beginning of DEFEXPO India 2002, stated clearly that we have moved beyond simple buyer-seller relations to the terrain of cooperation, joint ventures, and partnerships. We in South Africa are at one with this view, and the strength and variety of the South African presence here testifies to our commitment as a country and as industry to enriching the good relations we have built in the short time since 1994. I wish therefore to make a few remarks that outline our approach to the defence industry in South Africa itself, and how we see the growth of international partnerships.
When the South African government engages in the international defence industrial arena it does so from a clearly defined set of premises derived from our own experience, and the experiences our ANC-led government learned from our active participation in the NAM and other bodies. Domestically, our objective as a government and a nation is quite simple. We must and we will preserve the massive capital and social investment in this high technology sector and ensure its application in a responsible manner that befits the highest requirements of a democratic state that participates in a world marked by massive inequalities that too often erupt into conflict.
To do so, we in South Africa believe that we must ensure not only the sanctity of life of our own citizens, but we must also ensure that those to whom we turn as a matter of last resort to secure peace, our soldiers, sailors, aircrew and support staff, can do their duty with the utmost confidence in the weaponry, support systems, intelligence and tactical agility of the instruments at their disposal. To consider anything less than this would be grossly irresponsible. Hence, both the dominant state owned defence sector and the 900 or so private sector companies and subcontractors in South Africa have the full support of the South African government to operate and function within a clearly defined regulatory and licensing framework.
The strategic business plans, corporate governance models and shareholder compacts employed at enterprises such as Denel are benchmarked above international best-practice. We understand very clearly that the defence sector requires strong ethics and sound principles, and it must operate and function in accordance with stringent licensing requirements. Fundamental to our international marketing and trade efforts is state-sponsored commitment to respect for international law, our own domestic regulatory regime, and respect for the domestic law of countries with whom we engage.
The South African government recently took a decision to acquire a strategic equity partner for Denel. Our intention was to build on resident skills and competencies, but more particularly to keep in touch with international developments. It is clear, from a research and development perspective, that international partners can bring new thinking, new technology and new approaches to best-solution products for moving defence requirements. Mix these with Denel’s current environment of cutting edge niche technologies, work ethos and scientific endeavour, and we believe South Africa will be able to extend its scale of operation and become the supplier of choice of a number of international partners. At the same time our own experience has led us to understand clearly that self-sufficiency is no longer possible. Whilst globalisation has ensured that much military materiel is ready for purchase of the shelf, the fact remains that it is impossible to remain at the forefront of militarily strategic technology without partners. Thus, it becomes critical to select as partners those countries and companies that can bring quality experience and initiative to Denel’s resource base. We are on the brink of making announcements in South Africa about the nature of our relationship with BAE Systems who we expect to acquire a minority share in Denel, as well as with Turbomeca with Denel Airmotive.
I stress these points, ladies and gentlemen, precisely because the same philosophy underpins our relationship with India and Indian industry. Someone asked on Tuesday why did Denel suddenly think it made business sense to develop an Artillery Partnership with India when we could just as easily continue to simply sell products into the Indian market. The question, first of all, ignores the fact that from the outset, Denel’s negotiations with its Indian counterparts have always included significant Transfer of Technology conditions.
It is precisely the extremely positive experience of working in India that has allowed us to develop our concept of the joint India South Africa Artillery Partnership. I have no hesitation in asserting that Denel today is arguably the world leader in Long-range Accurate Artillery Systems and Products. All our systems have been successfully tested in India over the past three years or so and I would suggest that these tests, conducted according to the requirements of India’s armed forces themselves, have shown that our technological expertise is flexible enough to accommodate specific requirements quickly and efficiently without losing impact. In fact, we would suggest that our joint work to date has revealed some important moves towards new generation artillery and ammunition. We have already proved through our strong relationship that the sky is the limit as far as our relations are concerned. Together, as South Africa and India, we can become the best artillery systems producers in the world.
Our own experience of acquisition in the SANDF, restrained in the recent past through budget reprioritisation, has given us an edge in understanding perfectly the benefits to be achieved through the development of practical, hard-hitting, and cost effective solutions to military needs. In particular, our whole artillery proposal to India is based primarily on developing an artillery family that includes mounted, towed, and self-propelled guns and turrets alongside a matching range of projectiles and charges that cover the range from incendiary, phosphorous, smoke and high explosive. I believe South Africa and India are already well positioned to utilize the building blocks of the Integrated Ballistic System in satisfying all of India’s artillery requirements. The results, I submit, would be most interesting.
Denel’s Ordnance group has been successful in several parts of the world, including the Middle East and lately even NATO, where our ammunition products were evaluated and found to be top of the class. During the trials, we competed even against big-name domestic companies in Europe, and still won the orders. As the world leader in Long-range Accurate Artillery Systems, Denel Ordnance has acquired the capability – and proven track record - to undertake world-class Prime Contractor and Programme Management of these systems. Resulting from the unique capabilities within this manufacturing group, especially in the area of Integrated Ballistic Design, we believe Denel has much to offer our clients, and in particular India. What we therefore envisage is the further exploration of the possibilities with Indian defence industries to build a synergistic relationship, through which technologies - and capabilities – from both parties could be pooled. These would be optimized at system level, to ensure that India is equipped with the BEST Integrated Artillery Systems in the world.
I have concentrated on the ordnance side of our relationship. However, Denel has capabilities that stand alone in South Africa but are also complemented by exceptional work carried out by our large and growing private sector companies. Denel has other divisions that deal with aviation and guided missile systems and all their related components. Denel’s aerospace portfolio covers an impressive spectrum: from fixed-wing fighter jets – now including the manufacture of structural parts for the Hawk and Gripen - to rotary-wing craft, such as our renowned Rooivalk attack helicopter and Oryx medium transport helicopter, as well as soon license manufacture of AgustaWestland helicopters. With an increasing awareness of the strategic and tactical value of Unmanned Aerial Vehicles (UAVs), I am proud to say that Denel has had many years’ experience in the design, development and application of sophisticated UAV systems. Guided systems, missiles and stand-off weapons, are all very much part of Denel’s capabilities.
Some key capabilities, indigenously developed for South African conditions yet now available to clients worldwide, include rather unique technologies. These may be found in the areas of EW (Electronic Warfare) equipment, avionics, radar and sonar, a variety of early warning systems, mine counter-measures and communication that have applications on land, sea, in the air and also underwater and communications. (We were arguably the first to develop Frequency-Hopping Radios and Helmet Mounted Sighting Systems).
Importantly, many of these systems have found non-offensive applications. By way of example: our UAVs have been deployed successfully in crime prevention roles or in border patrol operations. Their all-weather and night-flying capabilities, coupled with extremely sophisticated thermal imaging equipment developed in South Africa, allow us to keep an eye on our natural resources such as forests, wildlife or fishing in the Exclusive Economic Zone along the coast.
Since about 1994, Denel in general and its Ordnance business in particular, are export-driven. Denel’s activities extend to every continent in the world, covering some 55 or so countries at this stage. It is truly a global actor, and though small when compared to the giants of the developed world, it represents an important and reliable supplier in niche areas. Overall, Denel’s export cover is in the region of some 40% now, but in some divisions this has reached 80%. It may come as a surprise to some, but internationalization of Denel Ordnance has already taken this division from 10% export sales in 1992 to 80% in the current year. Ordnance exports in terms of turnover are expected to reach 90% in the next two or three years.
For my part, as representative of the South African Government, I would like to add: Denel is not alone in building this relationship with India. During the past few days, here in Delhi, both Minister Lekota and I have had most fruitful discussions with Indian Government officials and politicians. Similarly our High Commissioner here is most active on behalf of industry. She is known as a hard worker who will bring together the parties who need to speak to one another.
There is a long-standing relationship with India, which in latter years has culminated in the Red Fort Declaration and subsequently the formal Defence Cooperation Agreement. The South African Government is fully supportive of our industry’s involvement with Indian defence industry. The presence of my colleague, Defence Minister Mosiua Lekota and myself, along with other senior government officials, is testimony to the support we give initiatives such as these. We believe in South-South partnerships, in the benefit of closer relationships of the Non-Aligned nations and sharing of technologies among each other.
Let me take this opportunity once again to thank you once again for the pleasure of your hospitality and we look forward to a stronger relationship from now on.