Armscor board chair Ambassador Thutukile Skweyiya writes in the defence and security acquisition agency’s latest annual report the organisation is “an important nexus” between the national defence force and the South African defence industry.
“This may seem rather obvious,” the former South African ambassador to France writes, adding “putting it into practice remains a work in progress”.
She states “the envisioned depletion of the Special Defence Account (SDA), which is the primary financing tool for the acquisition of all defence matériel is all but realised” pointing out Armscor has had to evolve its own process to this unfolding reality.
In April, Secretary for Defence Dr Sam Gulube said the Special Defence Account is facing closure, potentially cutting off a R5 billion annual source of funds for the South African National Defence Force (SANDF). The Department of Defence was given advanced warning by National Treasury the SDA will be closed down or collapsed by 2021/22.
According to the 2019 budget document, the Special Defence Account was given funding of R6.2 billion in 2015/16, R5.6 billion in 2016/17 and R6.3 billion in 2017/18. This falls to R5.9 billion in 2018/19, R5.2 billion in 2019/20, R5.5 billion in
As regards Armscor achievements in the 2018/19 financial year Skweyiya notes promulgation of the Defence Sector Code and Defence Industry Fund as “major milestones”. She points out that Armscor could not have driven these initiatives without the support of the Minister of Defence and Military Veterans (Nosiviwe Mapisa-Nqakula), the Secretary for Defence, the SA Aerospace, Maritime and Defence Industries Association (AMD) and the wider defence industry.
In closing Skweyiya writes that Armscor remains “poised to deliver on its mandate”.
“We may not have reached the bottom of our challenges in the defence sector, but we are certain even when we plummet further, we’ll be ready to rise again as mist clears and our path becomes more defined.”
Kevin Wakeford, who resigned as Armscor chief executive, notes in his final report that “key to Armscor’s sustainability and survival is to ensure it plays a central role in the achievement of a competitive South African Defence Industry (SADI)”.
The nett financial result from operations shows a surplus of R235 million compared to a deficit of R10 million for the previous financial year. The improvement is mainly due to recovery of bad debts.
As far as acquisition – Armscor’s main business – is concerned, contracts to the value of R11.7 billion were managed and executed for the Department of Defence (DoD) during the year under review.
“R7.442 billion, or 63.26% of the total acquisition and procurement portfolio related to technology and capital acquisition projects, while procurement and maintenance and support contracts to the value of R4.322 billion or 36.74% of the total portfolio were managed and executed.”
A cautionary notes the total contract value for capital acquisition projects was reduced by R2 billion during October 2018, “due to rephasing of the order values of Project Hoefyster to later years”.
