Offset agreements in the defence arena : international practices and South African legislation and policies

Abstract

Offset agreements have become a common practice in the international arms trade, and are a reality in today’s defence market. Globally, military expenditure has grown, and offset strategies and policies for defence acquisitions are increasingly used. Currently, most countries insist on offsets for defence sector purchases. South Africa, a country with vast and urgent social needs, regards using offset agreements in military procurements as a strategy to enhance national development through foreign investment, job creation and growth of the national economy in general, and of the local defence-related industry in particular. This article focuses on South Africa’s experience in concluding offset agreements, with the aim of gaining a deeper understanding of the policies and legislation that allow South Africa to conclude such agreements in the global context of offset agreements. The discussion concludes that South Africa is in line with the rest of the world in creating its own offset policy. However, South African policy and legislation on offset agreements could be improved to contribute to the country’s actual economic and national development. South Africa’s offset policy goals are too broad – goals should be narrower, better defi ned, and more specifi c for the country to benefi t fully from offset projects.