SA cuts defence spending but the rest of the world spends more, more, more - report | Fin24

SA cuts defence spending but the rest of the world spends more, more, more - report

Jan 12 2020 09:00

Defence spending surpassed US$1.8trn in 2019, with six of the 10 fastest-growing defence budgets in Europe, according to a new report.

On the other hand South Africa, along with Africa's other usual "big spenders", bucked the trend by cutting budgets year-on-year.

Europe topped the global growth chart, with regional spending approaching $300bn.

The United States remains the biggest spender on defence, topping the list with $726bn compared to $742bn in 2018. Despite the decrease year-on-year, it still accounts for 40% of the global total.

China – in second place – increased its expenditure to $217bn from $208 the previous year.

Trailing far behind, in third place, was Saudi Arabia, with $57bn, constant across both years.

Jane’s Defence Budgets 2019 Annual Report is an open source report released yearly. It examines and forecasts defence expenditure for 105 countries. In 2019, it found that growth in defence spending in Western Europe reached the fastest rate since the Cold War at 4%. Notable growth could be seen in Germany and Sweden, which increased their budgets by 11% and 9% respectively. Germany is now the 7th-largest spender globally, Jane's said.

Eastern European spending, meanwhile, grew by 12%.

By far the fastest growth worldwide was in Bulgaria, which saw defence spending growing by 125% as the country made payment for eight F-16 Block-70 fighter jets in August.

Europe on the defensive

Fenella McGerty, principal defence budgets analyst at Jane’s, said "shifting strategic conditions" had driven growth in European defence spending since 2014 "as the regional security environment has deteriorated".

Spending on military investment in Eastern Europe has more than doubled since the annexation of Crimea in 2014 – from USD4 billion in 2013 to USD10.4 billion in 2019, McGerty said.

Overall, a trend of growth in global spending has continued for the past six years, though it slowed to 1% compared to a spike of 6% in 2018.

Europe, however, grew at 5.2%, which Jane's described as "exceptional".

Jane's projects that global spending growth on defence will moderate to between 1.5-2.0% per year over the next decade.

"Increases are dependent on the continuation of a stronger emphasis on defence in Europe but also on a return to more robust growth rates in emerging markets," McGerty said.

What's SA doing?

North America used to account for over half of global spending, but growth in defence spending in emerging markets has seen that proportion falling in recent years, Jane's said.

Sub-Saharan Africa increased its military expenditure by 2% in 2019, with the trend expected to continue in the coming decade.

"Jane’s notes that regional budgets in 2030 are expected to be close to USD18 billion – as opposed to the USD13 billion we see this year," said Ana Popescu, senior analyst at Jane’s.

South Africa – which Jane's classifies among the continent's bigger spenders, despite Defence Minister Nosiviwe Mapisa-Nqakula's criticism of what she describes as a steadily declining defence budget in real terms – bucked the trend along with Angola and Nigeria, by cutting budgets year-on-year.

Jane's believes that of this group, only Angola is expected to see its budget fall further. However, according SA's budget review, the special defence account, dedicated to acquisition and upgrading of weapons systems and technology, is set to be cut by R5bn in 2021/22.

Nigeria is expected to see a spike of 36% in 2020, but this will be almost entirely in personnel costs, Jane's said.


Hey, big spender

The US is expected to continue modernising its defence systems, Jane's said.

"In real terms, funding levels of USD742 billion in 2018, USD726 billion in 2019 and USD721 billion in 2020 have enabled the US DoD to start and continue on the road to improved readiness and acquire improved warfighting capabilities" said Guy Eastman, senior analyst at Jane’s.

"Modernisation accounts are expected to reach the level of USD247.3 billion in FY20 - the highest request level of investment funding in the last ten years. This will permit accelerated acquisition of capabilities inherent in ballistic missile defence, shipbuilding, military aircraft and missiles and munitions as well as RDT&E in science and technology."

Technology was a key focus, Eastman said. "The US continues to focus spending increases on innovation, with 2020 funding extensions for hypersonics, artificial intelligence, directed energy, autonomy, cyber and space."

* Compiled by Marelise van der Merwe



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