8.1.3 Aerospace and Defence Industry: South African context

supported elsewhere in Africa for every $1 of gross value added directly created by the air transport sector.

The International Air Transport Association (IATA) released new data indicating that the impact of COVID-19 on Africa’s aviation industry and economies has worsened sharply since the previous assessment. It is believed that:

• Job losses in aviation and related industries could increase by up to 3.5 million. That is more than half of the region’s 6.2 million aviation-related employment and 400,000 more than the previous estimate. • GDP supported by aviation in the region could fall by up to $35 billion. IATA previously estimated a $28 billion decline9 .

However there is a silver lining for the industry, in Africa. The fast-growing African space industry is expected to hit $10 billion by 2024 with a current value of more than $7 billion10. Not only the African Aerospace industry is growing in the space sector but also in the aviation/air transport contributing to more than $55.8 billion in the African economy11 . According to Airbus’s White Paper report, the top most countries in the African Aerospace industry are South Africa with $1.8 billion, Morocco with $1.1 billion, and Tunisia with $430 million in industry sizes. In the global aerospace industry ranking, South Africa and Morocco rank in the top 4012 .

8.1.3 Aerospace and Defence Industry: South African context

A case for South African MRO: In 2016, South Africa ranked 76, after Greece, for global U.S. aircraft parts exports. However, the growth of commercial and general aviation in southern Africa has slowed down significantly; high operating costs and a sluggish economy are taking their toll on discount airliners and general aviation. The launch of the African Union’s Single African Transport Air Market, which comprises 28 countries including South Africa, in 2018, provided airlines an opportunity to increase their operations on the continent. The biggest growth is expected in other Sub-Saharan African states as they ramp-up up their capacity to meet long-term growth in passenger travel and air freight. There has been a downturn in airborne off-shore utility and mineral deposit surveying done

9 https://www.iata.org/en/pressroom/pr/2020-08-13-03/ 10 Press Release, Space In Africa, 2019. https://africanews.space/african-space-industry-now-generatingover usd-7-billion-annually-to-exceed-usd-10-billion-by-2024/ 11 Air transport contributes 6.2m jobs, $55.8bn to Africa GDP – ICAO, The Aviation & Allied Business

Journal, 2019. https://aviationbusinessjournal.aero/2019/11/13/air-transport-contributes-6-2m-jobs55-8bn-to-africa-dp-icao/ 12 Air Bus’s White Paper, The Great Enabler: Aerospace in Africa, 2018. https://www.airbus.com/content/ dam/corporatetopics/publications/brochures/TheGreatEnable_AerospaceinAfrica.pdf

by South African operators in southern and central Africa over the past years. Unmanned aerial systems (UAVs) / drones are however making steady progress for a host of utility and security applications.

The single most important aviation procurement, the long-anticipated upgrade of the national carrier South African Airways (SAA) fleet amounting to as many as 20 jetliner aircraft is still in question, with the statutory appointed Business Practitioner Rescue (PBR) process under close scrutiny by both National Treasury and organized labor. The SAG is still hoping that a turn-around strategy will succeed by finding an equity partner.

Due to a shortage of skilled technicians and a low throughput from training institutions, there are opportunities in training systems to upgrade the skills pool. There is also demand for commercial and general aviation solutions from the United States in the following fields:

• Engine Management Systems • Precision Tooling • Maintenance, Repair, and Overhaul (MRO) Certification • Flight Training Systems

Trends highlight some immediate opportunities for the South African A&D industry such as:

• Given the increased overlap between products intended for defence and civilian use, the aerospace industry includes companies that produce defence equipment or products by making use of civilian technologies, or which manufacture dual-use products that are saleable in both defence and non-defence markets. The technological intensity of the aerospace and defence sector acts as a driver for new technologies and technical skills to be developed in the country, that are diffused to other sectors thereby intensifying industrialisation and contributing to the evolution towards a knowledge economy. Of real importance to the role of the Cav, is the increased use of digital technologies, such as blockchain and Additive Manufacturing, artificial intelligence, virtual reality and other visualisation technologies creates an opportunity for CAV to reach out to high technology start-ups and create an enabling environment for these companies to engage with the OEM suppliers and MRO companies in the local and international A&D industries; and • The introduction of new technologies in manufacturing (e.g. AM) and digitalisation (e.g.

VR and autonomous platforms, cyber security etc.) could also be an opportunity for

CAV to establish a high tech industrial park that will serve to support the whole domestic industry by providing support for high bandwidth communication using broadband fibre optic networks, incubation centres for high technology start-ups and conference and training facilities geared to support high tech entrepreneurs and engineers, IT specialists and material scientists.