Financial Public Private Partnerships for the South-African National Defence Forces

Published
Springbok armoured vehicle by DCD Protected Mobility

On 16 August 2023, EDTA president Jan Wind was invited to speak about Financial Public Private Partnerships (FPPPs) at the Public-Private-Partnerships (PPP) for Security and Defence Conference organised by Defenceweb in Pretoria (South Africa).

His main message was that innovation could speed up if private funds are used effectively in a Public Private Partnerships for Defence. Similarly, private financing methods could be used for major programmes: manufacturing of capabilities and in-service support. It could be important for the South African Defence to take advantage of these opportunities to strengthen its capabilities.

Conclusions

1. Progress in Europe
Financial Public Private Partnerships are pursued by the European Union, NATO and several European member states. These seem to be quite complex to develop, but it has advantages to involve the financial sector in national security. Certainly, since the war in Ukraine has taught us that peace is more fragile than we thought.

However, misunderstandings, emotion and lack of knowledge from both the military and the financial sector are potential stumbling blocks that need to be avoided.

2. FPPP for innovation and businesses
Relatively small Defence related innovations of a few million euros are almost impossible to finance by private funds. Development of a large and specialised international fund to invest in multiple companies and projects seems more realistic. However, participation of national or supranational governments with some form of guarantee is indispensable to make this possible.

3. FPPP for major programmes
Institutional investors are quite interested to supercharge important replacement programmes or procurement of new capabilities. Long-term, high financial volume and low financial risk are the keywords for this solution. For the South African National Defence Forces, the Multi-Mission Off-Shore Patrol Vessels, their on-board helicopters and the Maritime Patrol Aircraft programmes would probably be good candidates. 
To achieve this, an intensive and open consultation based on trust will be necessary between government, industry and investors.

For more information contact Jan Wind at jw@fedta.eu


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