JOHANNESBURG– Saudi Arabia is in talks with South Africa’s major arms manufacturers and is considering taking an equity stake in the struggling state-owned defense firm Denel, the head of the Saudi state defense company said.
Saudi Arabian Military Industries’ (SAMI) chief executive Andreas Schwer said he expected to conclude the first partnership deals with South African companies by the end of the year, though he would not identify those initial partners.
South Africa’s Department of Public Enterprises, which oversees Denel, acknowledged the talks with SAMI but said it was too early to give details of any potential partnership arrangement.
The Paramount Group, a privately-held South African company, has already said it is in talks with SAMI.
To make it clear, we are in discussions with all major South African companies, not only Paramount, not only Denel, Schwer said in a telephone interview.
South Africa’s defense industry once played a major role in the country’s economy, but more recently it has suffered from the impact of a squeeze on defense spending globally and a weak home market.
Saudi Arabia is the world’s third largest defense spender behind the United States and China with an estimated military budget last year of nearly $70 billion.
Since 2015, the Gulf state has been fighting a war against the armed Houthi movement in Yemen in support of the internationally recognized government there.
With little local manufacturing capacity, however, it has long been forced to import the bulk of its military hardware.
The Saudi government is now seeking to develop its own domestic defense industry with the goal of localizing half of its military spending by 2030. Schwer said SAMI aimed to have all its foreign partnerships in place by the end of next year.
We are in discussions with the South African government in order to identify opportunities to set up strategic partnerships which could include an equity investment from our side into Denel. It’s not decided yet, but it’s one option, Schwer said.
Source: NAM NEWS NETWORK