Trade and Industry Minister Dr Rob Davies has approved and gazetted for public comment the draft Broad-Based Black Economic Empowerment (BBBEE) code for the defence industry, the Department of Trade and Industry (DTI) announced on Friday. In line with the BBBEE Act, there will now be a 60-day period for public comment and input before the defence industry code is gazetted for implementation.

In his statement about the code, Davies cited two elements as being of particular importance. One is that defence companies will have to obtain 60% of “products” from local companies, while the other is that they must support those enterprises which introduce new technologies into the sector.

“This is a defence industry specific element designed to stimulate local manufacturing and increase global competitiveness,” he affirmed. “The other key highlight is that private sector entities in [the] defence industry must sub-contract no less than 30% of any contract exceeding R30-million to companies owned by the Black designated groups. This will enable such companies to be sustainable.”

The development of the defence industry code has followed on from the creation of the National Defence Industry Council. The council set up a team to develop a BBBEE code for the sector.

The team was composed of representatives of the Department of Defence (DoD), Armscor (the DoD’s acquisitions, sales, and research and development agency), and the South African Aerospace, Maritime and Defence Industries Association (better known as AMD). The team undertook the required consultations and negotiations about, and the drafting of, the code.

Davies pointed out that the code was applicable to all South African defence industry entities. These include both public- and private-sector companies and national and provincial government departments.

It also applied to the provision of both goods and services, and to whether they were acquired from local- or foreign-owned businesses, as well as (in the words of the DTI) to “defence manufacturing enterprises, research and development enterprises and other entities, as well as any role-player and stakeholder that might opt in”.