Saudi state defense firm pens deal with South Africa’s Paramount
JOHANNESBURG (Reuters) – Saudi Arabian Military Industries (SAMI) and South Africa’s Paramount Group have signed a collaboration agreement as part of the Gulf kingdom’s efforts to develop its own domestic defense industry, the two companies said on Wednesday.
Currently heavily dependent on imports, Saudi Arabia, the world’s third-largest defense spender, is seeking partnerships with the goal of localizing half of its military spending by 2030.
Under the deal, SAMI, the kingdom’s state defense company, and Paramount, a private company, would collaborate on the development of technologies and capabilities across the land, sea and air domains, as well as system integration.
“This will contribute significantly to further enhancing the capability of Saudi Armed Forces and increasing local content,” SAMI CEO Andreas Schwer said in the statement.
Schwer told Reuters last year that SAMI had approached a number of South African defense companies to help it fulfill its domestic defense needs.
The deal with Paramount is the first with a South African firm to be announced. The companies did not give further details as to the nature of the agreement.
“Saudi Arabia is important to Paramount Group as much of the technology that we have created over the years has been developed with the Middle East in mind,” Paramount chairman Ivor Ichikowitz said
South Africa’s defense industry was an important pillar of the country’s apartheid-era economy. But it has for years suffered from the impact of a squeeze on defense spending globally and a weak home market.
Saudi Arabia made a $1 billion bid last year for a broad partnership with South Africa’s struggling state defense company Denel that would have included acquisition of a minority stake in its joint venture with Germany’s Rheinmetall.
Despite a desperate need for cash however, Denel failed to strike a deal by the end of the year, the deadline by which SAMI said it wanted to conclude an agreement.