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Special Defence Account revenue used to fund SANDF

altR25 million generated from the sale of equipment and spares procured through the Special Defence Account was used to fund the landward and air arms of the South African National Defence Force (SANDF) in the 2014/15 financial year, according to the Department of Defence.

This was revealed in the 2014/15 Department of Defence (DoD) annual report, which states that: “Rm25,645 in revenue generated from selling equipment and spares procured through the Special Defence Account has been surrendered to the National Revenue Fund. It will be used for defence activities, as follows: Programme 3: Landward Defence: Rm15,929; Programme 4: Air Defence: Rm9,716.”

It is not clear where the revenue came from. The annual report states that the 2014/15 Defence Vote was increased with R25.645 billion to R42.857 billion “through the Adjustments Vote for Self-financing Expenditure.”

The 2014/15 Defence Vote increased with R2.5879 billion (6.43%) from the previous financial year. The Defence Vote amounts to 1.13% of South Africa's Gross Domestic Product (GDP) or 3.75% of total government expenditure. The overall increase in the allocation is due to improvements in conditions of service, peace missions in other countries, border safeguarding tasks, maritime security tasks and military veterans' affairs.

From an economic classification perspective, compensation of employees (51.32%) and transfers and subsidies (18.30%) amount to 69.62% of the Vote, leaving available 30.38% for operating the Department and renewing capital assets. Significant operating costs provided for are Property Payments (R2.970 billion), Contractors (R2.789 billion) and Computer Services (R1.073 billion).

Landward Defence (R14 billion/32.35%), Air Defence (R6.9 billion/16.73%) and General Support (R4.9 billion/12.11%) are the three largest programmes in the Defence Vote. The annual increase in the Administration programme is mainly due to the additional allocation for military veterans' affairs and the establishment of the DOD Internal Audit Division. The increase in the Air Defence programme is due to the allocation of funds for Air Force operations and the provision for the acquisition of maritime surveillance aircraft, while the increase in the Maritime Defence Programme is due to the provision for the replacement of offshore patrol vessels under Project Biro. The decrease in the General Support Programme is mainly due to the reduction in the provision for Goods and Services, especially Computer Services and the non-recurrent transfer payment and Payment for Financial Assets that occurred during 2013/14.

The Department of Defence is working a Defence Funding Model for the implementation of the objectives of the Defence Review, aligned with the envisaged Extended Long-Term Defence Development Plan and reflecting on the imperatives of the NDPVision 2030. “The funding model for Defence should be based on the 40:30:30 expenditure principles: 40% of expenditure should relate to human resources, 30% to operating expenditure, and 30% to capital expenditure,” the annual report states.

In the FY2015/16, the Department will develop an implementation plan for the 2014 South African Defence Review, working towards the Defence Review's Milestone 1: “Immediate, directed interventions to Arrest the Decline in critical defence capabilities”. Amongst others, this directed intervention will take place in the landward defence, air defence, maritime defence and military health support programmes.

* This story has been corrected to reflect that the correct figure is R25 million and not R25 billion.