The financing of a huge South African arms deal has resulted in some bizarre agreements, including the establishment of a condom plant by a German steel conglomerate.
The controversial deal -- critics have asked why the country needs new submarines and fighter jets -- is the largest since the end of apartheid and involves deals to ensure much of the cost is reinvested in the South African economy.
A controversy over alleged bribes has also raged in the South African press almost since the deal was announced.
German steelmaker Ferrostaal, through one of its investment subsidiaries, owns a 15 percent stake in a company making condoms with Cologne-based Kondomi, and now Kondomi plans to produce around 100 million condoms a year for the African market.
Unfinished condoms are to be imported from Germany to the plant at East London, where another famous German company has its South African plant -- DaimlerChrysler. Here the finished goods will be made up and packed.
Ferrostaal is a member of the consortium that is building three submarines for the South African navy at a total cost of US$857 million.
The submarines are part of a military modernization program intended to replace the 30-year-old hardware of the South African defense forces.
Other items include four new frigates, 30 light helicopters, 24 jet trainers and 28 strike jets, and the entire project was originally estimated to cost 30.3 billion rand -- although the currency's recent fall has hiked the figure to 43 billion rand (around US$4.5 billion).
The arms deal, signed in 1999, contains provisions that require all those providing the arms to buy South African goods or invest in South Africa to a total amount of US$15 billion by 2011.
The aim is to boost the domestic economy, where the official unemployment rate is 26 percent, and where foreign investment is falling.
By June this year, there had been only US$403 million in foreign direct investment -- a decline of 27 percent on the year.
Sweden's Saab and Britain's BAE Systems, who are providing Gripen fighters and Hawk trainer aircraft respectively, have also come up with unusual schemes to comply with the terms of the deal.
A consortium is investing 600 million rand in Global Forest Products (GFP), founded at the beginning of the year, and the two aircraft manufacturers are providing 55 million rand in capital.
GFP, which owns forests and plantations as well as three saw mills, is expecting export contracts over the next 10 years totalling around five billion rand.
The concern is a joint venture, with the Washington-based Global Environment Funds owning 51 percent and the South African paper manufacturer Mondi the rest.
GFP will prevent a saw mill in Mpumalanga Province from closing and thus save around 200 jobs.
Proudly presenting the scheme in front of the cameras, Defence Minister Moisuoa Lekota announced other investments in a range of projects.
The government is in need of positive news, as the scandal over the project refuses to die down.
A recently published report into the deals alleges some of those involved could face apparent conflicts of interest, and the authorities have started a preliminary inquiry into their affairs.



