Defence Sector Code

Defence Sector Code
February 4, 2019 Chante Hobbs

The new Defence Sector Code was gazetted on 9 November 2018 by the Department of Trade and Industry. This Sector Code also came into effect on the date of publication.

It will be applicable to all enterprises in the South African Defence Industry (SADI) – these include National or Provincial Departments, Organs of State, Public Entities as well as private enterprises providing defence material and/or any other supplies, products and services to the Department of Defence or its agencies. SADI is also the collective term for South African Defence Related Industries and means those entities in public or private sector, including commercial and business units such as entities who are directly or indirectly active in the design, research, development, manufacturing and marketing of Defence Materiel.

Turnover brackets

It is important to note that the following turnover brackets must be applied in determining whether an entity is an Exempted Micro Enterprise (EME), Qualifying Small Enterprise (QSE) or Generic Enterprise:

  • EME: Turnover of less than R5 million per year
  • QSE: Turnover between R5 – R50 million per year
  • Generic Enterprise: Turnover of more than R50 million per year

Black Military Veterans are considered

One of the important definitions in terms of this Sector Code is the definition of Black Military Veterans who are defined as follows:

“Any Black South African Citizen who:

  • Rendered military service to any of the Non-Statutory Military Organizations, which were involved in South Africa’s Liberation War from 1960 to 1994;
  • Served in the Union Defence Force before 1961;
  • Became a member of the new South African National Defence Force after 1994;
  • Has completed his or her military training and no longer performs military service, and has not been dishonourably discharged from the military organisation or force, provided that this definition does not exclude any person referred to in paragraph 4.5.1 or 4.5.2 who could not complete his or her military training due to injury sustained during military training or a disease contracted or associated with military training”

Black Military Veterans will be taken into consideration with the Ownership, Management & Control as well as the Skills element.

Indicators & Elements

This new Sector Code also makes provision for a new indicator namely Enterprise & Supplier Development Fund as well as a new element, Localisation. The Localisation element deals with procurement of defence material from local suppliers. The Enterprise & Supplier Development Fund is a fund that will be set up and approved by the Department of Defence and the Department of Trade and Industry. This fund will be administrated by the Defence Charter Council and will be utilised for Enterprise and Supplier Development initiatives.

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