Offsetting the costs of SA's strategic defence package

This paper reviews the benefits that could come to South Africa if the industrial participation agreements are fully realised.

Industrial offset programmes are often used in the defence trade worldwide to offset the effect of unusually large purchases by requiring a percentage of the contract value to be invested in some way in the economy of the purchasing country. As part of South Africa’s arms procurement process—the strategic defence package—the government secured industrial participation agreements that amount to more than 400 percent of the value of the weapons being purchased. This paper explores this dimension of the defence package and reviews the benefits that could come to South Africa if the industrial participation agreements are fully realised.

About the author

David Botha wrote this paper while a consultant to the Institute for Security Studies Arms Management Programme. He has previously worked for many years as a senior manager in the public and private sectors of the defence industry.