Paramount Group: Out of Africa

South Africa’s Paramount Group is making waves by taking on the big players in the global defence industry. Founder and chairman Ivor Ichikowitz explains why his company can be a forerunner for other firms from the continent

“Some of the greatest innovation I have ever seen has come out of Africa,” says Ivor Ichikowitz. “But for some bizarre reason, people refuse to believe that.”

Ichikowitz, the wealthy industrialist, and chairman and founder of the Johannesburg-based Paramount Group, is hoping to buck those misconceptions. Already Africa’s largest home-grown defence and aerospace company, Paramount Group is in the midst of a growth spurt that Ichikowitz says will see it pass a billion dollars in revenues, either this year or in 2015.

“We have a remarkable technology base in South Africa,” he says. “There’s a tremendous research and development and prototyping capability. But it’s never been our plan to create huge industrial capability in South Africa — the geography is all wrong. And, frankly, there are other places in the world where we can better set up manufacturing… to keep it as close to the market as possible.”

In short, then, Paramount’s plan is to market its products — which will soon include Africa’s first self-funded military jet, alongside armoured cars and naval vessels — to emerging-market clients it thinks the more conventional defence suppliers haven’t yet reached, or are unwilling to service.

“Our biggest focus is to provide affordable solutions — not cheap ones — right across the board,” says Ichikowitz. “Our logic is that it doesn’t matter how much money you’ve got, you’ve still got to be able to provide your forces with the same basic levels of capability.”

That focus on emerging markets is in line with the current trends in the global defence industry, which is seeing established Western economies retrench spending on their military budgets, with the slack being taken up by faster growing markets in South-East Asia, the CIS and the Middle East.

When it comes to the Gulf, Saudi Arabia spent $67bn on military equipment last year, according to the Stockholm International Peace Research Institute (SIPRI), overtaking both the UK and France to make it the fourth-largest defence market worldwide. The kingdom spends a colossal 9.3 percent share of its gross domestic product (GDP) on defence and defence-related products, by far the highest in the top 15 biggest military buyers.

Next, in terms of spending as a percentage of GDP, is the UAE, which splashed out an estimated $19bn last year — a figure that has shot up by 85 percent in the last decade alone.

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