Budget cuts mean South Africa is losing its sovereign capability, defence industry


Successive budget cuts are causing the South African National Defence Force (SANDF) to lose its capabilities and are also threating South Africa’s defence industry, a parliamentary committee has heard.

On 27 May, the Portfolio Committee on Defence and Military Veterans (PCDMV) was briefed by the Department of Defence (DoD). It heard that the SANDF has been in a critical decline since the last defence review (drafted in 2012 and approved in 2015). The review then described the SANDF as being “characterised by force imbalance, unaffordability of its main operating systems, inability to meet current standing defence commitments, and the lack of critical mobility”.

Defence and Military Veterans Minister Nosiviwe Mapisa-Nqakula said that budget shortfalls have hit her department hard. At present the SANDF has only been provided with 63% of the funding needed to meet its requirements. “We are therefore in the dilemma of lacking financial resources for the mandate of the defence function, as per the 2015 defence review.”

She said that efforts have been made to at least keep paying salaries, with money moved from goods and services to salaries, and she had engaged with Treasury and the department of public service and administration to address funding challenges. The DoD may dispose of assets to generate money.

“Even now as I am talking, because of the economic situation which prevails in the country, there are all indications that there may be a further cut to the baseline,” she said.

The DoD said a major challenge it faces is a decline in the ability to maintain equipment, with stock levels inadequate to support current defence commitments. A reduction in the training budget has seen training cut back significantly, with capabilities not at the required level of combat readiness. The committee heard that the SANDF faces equipment obsolescence, with the army especially hard hit, with little prospect of modernisation. Other issues include facilities degrading due to a lack of funding, affecting combat readiness, and old and obsolete information and communications technology facilities leaving the SANDF vulnerable to cyber threats.

The JSCD said it is concerned that the Defence Force is fast losing its capabilities, owing to successive budget cuts that have also impacted on its defence material acquisition programmes, with the resultant knock-on effect on the defence industry. The Chairperson of the committee, Cyril Xaba, said: “With the Defence Force in a state of decline, the country is losing its sovereign capability, something that will take many years to rebuild.”

The committee will, in the next few weeks, have in-depth discussions with the department on these challenges to save the defence force from collapse.

Industry in decline

The reduction in the defence budget is also hurting the defence industry, especially with the closure of the Special Defence Account (SDA). “The reason why the defence industry is collapsing today is because of the cuts in the budget of the defence force. Therefore the defence industry, which is supposed to be sustained by the defence force, is unable to get that kind of sustenance because there is no injection coming from the defence force,” Mapisa-Nqakula said.

“It’s obvious that therefore your defence industry will collapse…The challenges of Denel in particular…who we rely on for production of our own equipment…also impacted on the collapse of the smaller companies because they outsource and they are unable to pay the smaller companies,” she said.

The minister added that several projects have ground to a halt because there are no resources to proceed. The JSCD heard last week that Denel was experiencing major challenges delivering Badger infantry combat vehicles to the South African Army, with the project more than three years behind schedule. Armscor hinted that cancellation might be an option if problems persist at manufacturer Denel Land Systems.

The DoD warned that “In situations of war or external aggression, South Africa will not have a defence-related industry of its own for arms manufacturing and modernisation. Partly our sovereignty is at risk of being eroded due to future reliance on foreign defence industries.”