Arms Deal offsets: Ten years on, only 40% of jobs created
The National Industrial Participation Programme's (NIPP) Performance Review 2009, which has now been released, reveals that international Arms Deal contractors have created only 40% of the jobs they committed to - only 26 000 direct jobs in ten years, instead of the 65 000 jobs promised ten years ago. In light of the release of these startling figures, the Trade and Industry Portfolio Committee needs to call an urgent meeting to review the status of these offsets.
The R48bn Arms Deal was signed on the condition that international arms companies "offset" their contracts by investing directly in South Africa. This industrial participation was often the main reason contracts were signed with specific bidders.
A decade on, it is close to impossible to assess the status of the NIPP because the Department of Trade and Industry continues to obfuscate in its reporting, concealing the true cost of the Arms Deal to our country. Each year, the NIPP reports fail to provide specific detail on the sales and investment targets of each international contractors - and the milestone periods applicable to them. What numbers there are, however, point to a general failure to create sufficient jobs and a R1,4bn breach of contract by the German Frigate Consortium.
The NIPP report refers to R136bn (US$19bn) of offsets realised but - given that the Strategic Defence Programme "accounts for approximately 85% of the NIPP in value terms" - the total amount of Arms Deal offsets realised so far would be around R116bn. Eleven years ago the Defence Minister announced that the NIPP would bring in R110bn, but in 2010 prices that amount should be upwards of R200bn. If that were the case, where would the missing R84bn come from?
Furthermore, the report shows that the major player behind the German Frigate Consortium, Thyssen Krupp, is R1,4bn ($205m) short on their offset obligation. This is apparently because of a "lack of administrative capacity" on the part of Thyssen Krupp - hard to believe from a global company with revenues of €40bn and almost 200 000 employees. The company should be fined in line with the performance guarantee clause in their contract.
In my first meeting with the chairperson of the Trade and Industry Portfolio committee, Joan Fubbs MP, I will request that she calls an urgent meeting of the committee to review the status of the offset obligations that arose as a result of the Arms Deal.
Statement issued by Tim Harris, MP, Democratic Alliance shadow minister of trade and industry, September 13 2010
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