Arms deal offsets created 26 000 jobs

2010-09-13 12:34

Industrial participation contracts linked to South Africa’s multibillion-dollar arms deal created or retained 26 000 jobs, according to a review by the Department of Trade and Industry.

“The NIPP (national industrial participation programme) is working, and it is working by and large along the lines intended,” the DTI said in the 2009 report released last week.

“There is little doubt that the NIPP has beneficially affected the growth and trajectory of the South African economy and thus on the lives of our citizens.”

The DTI said the programme led to the implementation of 220 projects, sometimes in remote rural areas, and contributed an annual average of R14.8 billion to the gross domestic product.

Some 44%of the jobs created were filled by semi-skilled workers.

Commenting on the report today, the Democratic Alliance pointed out that the Mbeki administration promised 10 years ago that the programme would create 65 000 jobs. It had therefore fulfilled only 40% of the expectation.

DA MP Tim Harris accused the DTI of concealing the exact nature of contract breaches on the part of arms suppliers by not outlining the deadlines and targets set for each.

Furthermore, it was not clear why the government had hesitated to invoke penalty clauses, Harris said.

The German Frigate Consortium, under investigation for paying bribes to secure a tender to supply four corvettes to the navy, failed to fulfil its obligations yet the government had taken no recourse.

“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 R1.4 billion breach of contract by the German Frigate Consortium,” Harris said.

He said the company should be fined, and undertook to ask that Parliament’s portfolio committee on trade and industry force the department to give a clear account of the state of offset deals.

The DTI conceded in its report: “The fact is that not all projects succeeded. It would be unrealistic to expect otherwise.”

The reasons for failure included inexperience on the side of local project managers, the decrease in demand created by the global financial crisis and currency fluctuations.

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