Presentation to the SA UN Procurement Summit Kevin Wakeford Armscor CEO Armscor as the South African conduit to drive United Nations’ procurement in South Africa

2  Armscor strategy: “On Time In Time – Towards A Sustainable Future” developed in 2014/15  Key Principles:  Defence and Industry working together to promote South African goods and services  Support a Defence Industry growth partnership beyond SA boundaries  Localisation, indigenisation to optimise defence expenditure ROI in GDP  Promoting SMMEs in Defence and beyond . ARMSCOR TURNAROUND

3  Key principles (contd):  Effectiveness of SANDF in peace keeping is a catalyst for stability. Stability opens up trade opportunities.  Economic opportunity for the RSA lies in the growth and stability of Africa.

ARMSCOR CAPITAL ACQUISITION PROCESS 4 PHASING OUT OPERATION PRODUCTIO N INDUSTRIA- LISATION DEVELOPMENT DEFINITION CONCEPT DESIGN BASELINE MANAGEMENT Quality Assurance, Configuration Management and Defence Industrial Participation DEFINING THE SOLUTIONCONTRACTING THE RIGHT CONTRACTOR & MANAGING THE CONTRACT PRODUCT SUPPORT ASSESSING THE NEED STOCK SALES DESTROY USER REQUIREMENT UPGRADE

ARMSCOR CORE BUSINESS FUNCTIONS 5 Acquisition Capital acquisition Development Technology development Product Support of existing systems Procurement of spares Disposal of Defence material Defence Industrial Participation Research & Development Armour Development Defence Decision Support Institute (Operational research, Decision support, Capability analysis, Product systems management) Ergotech (military ergonomics research and support) Protechnik (Chemical and biological defence research) Hazmat Protective Systems (Respiratory protection products) Flamengro (Computational mechanics modelling) Institute for Maritime Technology (Operational and decision support to SA Navy) Dockyard Strategic facility of the Navy

6 Current reality - exports to Africa can diminish due to instability in Africa The SANDF is not a tool of war. It provides stability in Africa and reduces the impact of illegal cross-border activities to the advantage of the RSA economy. Total: R73bn DRC!Lesotho DRC! Total: GATEWAY TO DEFENCE SOLUTIONS WHAT IS THE VALUE OF SECURITY IN AFRICA? ARMSCOR TURNAROUND

 What do we want to achieve? enable small business participation, otherwise excluded due to the scale of supply required increase SA’s non-military commodity supply increase SADI’s export Armscor as intermediary: enable small suppliers to participate, otherwise excluded due to the scale of supply required  Progress dependent on establishing reliable supply chain Main objective of Summit is market linkage Supplier data is captured at this Summit which will form main supply chain for UN and Armscor business development engagements 7 GATEWAY TO DEFENCE SOLUTIONS ARMSCOR PROCUREMENT FOR THE UN

8 MONUSCO ARMSCOR PROCUREMENT FOR THE UN AND ARMSCOR AS A PROMOTER AND CONDUIT OF SADI PRODUCTS Armscor as a strategic supplier of the UN:  soldiers  R20 billion UN Expenditure  Better sustainment of SANDF peace mission in Goma Armscor as a strategic supplier of the UN:  soldiers  R20 billion UN Expenditure  Better sustainment of SANDF peace mission in Goma Position RSA industry to support: Zambian industry MONUSCO Future Katanga economy Future DRC stabilized region Position RSA industry to support: Zambian industry MONUSCO Future Katanga economy Future DRC stabilized region Armscor as a conduit for SADI products to the UN  Armscor responded to a UN RFI for  Uniforms. > 80% of the RFI could be serviced by SADI SMMEs. SMME would not be able to respond to the RFI on their own due to scope. Armscor as a strategic supplier to the UN: Consolidation of SADI products, especially SMME with addition value add such as QA, supplier capability assessment Armscor as a conduit for SADI products to the UN  Armscor responded to a UN RFI for  Uniforms. > 80% of the RFI could be serviced by SADI SMMEs. SMME would not be able to respond to the RFI on their own due to scope. Armscor as a strategic supplier to the UN: Consolidation of SADI products, especially SMME with addition value add such as QA, supplier capability assessment Armscor engaging in government to government Level agreements to be a strategic Defence partner

Armscor Turnaround positions Armscor as an organisation working at a government to government level for collaboration that achieves mutual support of developmental agenda –Builds goodwill and trust amongst client countries & SA –Armscor is considered to be the only Acquisition agent of its kind on the African continent –Service offering is not limited to the procurement of good and services but through life-cycle management services. Hence ROI in business collaboration is amplified by the broader role that Armscor can play –Endeavour to sell goods which can be supported by client local base –Support defence capability development in client countries which leads to spill-off into economy 9 GATEWAY TO DEFENCE SOLUTIONS ARMSCOR’S UNIQUE VALUE ADD

10 GATEWAY TO DEFENCE SOLUTIONS CONCLUSION  Opportunity for Industry Participation in Armscor work significant due to wide Customer base and its mandate  The Armscor Turnaround will the push historic boundaries & encourage growth beyond SA  Armscor as a strategic supplier to the UN, AU can be regarded as a catalyst of continental growth and expansion  Armscor supports SMMEs, EMEs and women- and black owned businesses by: Promoting the smaller player in the acquisition process Development of Defence Sector Charter Defence Review fund “Your Partner for Peace, Stability and Development in Africa”