Industrial Participation (Offset) Programme

South African authorities have singled out BAE Systems and its Gripen partner, Saab, for their performance in delivering over half a billion dollars of surplus economic benefits to the country through their combined industrial participation (offset) activities.

In its 2007 annual National Industrial Participation (NIP) report, South Africa's Department of Trade & Industry, confirmed that BAE Systems and Saab have delivered US$4.8 billion of new economic benefits to South Africa so far and are on track to fulfill their 2012 US$8.7 billion offset target.  This was against a US$4.3 billion milestone target at the end of August.

This obligation is tied to South Africa's 1999 purchase of Hawk lead-in fighter trainers and Gripen fighters.  By the end of 2007, 22 of South Africa's 24 new Hawks will have been delivered.  South Africa receives its first of 26 Gripens in March 2008.

Since launching a combined South Africa NIP programme in early 2000, BAE Systems, together with Saab, have implemented over 100 industrial participation projects boosting South Africa's manufacturing-for-export capacity with ventures addressing a spectrum of civil sectors including agriculture, mining and minerals processing, medical research, automotive manufacturing and timber production.

At the same time, South Africa's Armscor has also reported that BAE Systems had also surpassed its delivery targets on its direct, defence-related offset activities linked to the country's Hawk purchase.  BAE Systems incurred a ZAR4.252 billion obligation to support South Africa's defence and aerospace industry.  By March 2007, BAE Systems had delivered just over ZAR4 billion, comprising ZAR789 million of technology transfers and ZAR17 million of direct investments which have generated ZAR3.195 billion of local and export sales for local defence companies.

BAE Systems' joint defence offset with Saab has made similar progress in the ZAR3.38 billion of benefits to the economy through defence industry activities linked to South Africa's Gripen purchase.

Armscor's annual report tabled in Parliament at the end of October 2007, indicates that this total benefit comprises ZAR172 million of investment resulting in ZAR1.46 billion of local and export sales of South African equipment and services and ZAR1.75 billion of technology transfer to South Africa's defence and aerospace industry.  The report highlighted a modest 108 percent surplus in the fulfillment of BAE Systems and Saab's joint Gripen defence offset programme, against the 2007 target.