Alarmed by financial difficulties at Denel and their impact on SA National Defence Force (SANDF) projects, the Department of Defence (DoD) appointed a Save Denel technical team.
This is according to Secretary for Defence (SecDef) Sonto Kudjoe. In a speech delivered on her behalf by DoD director: industry support Trevor Mketi at the recent Aerospace, Maritime and Defence Conference, Kudjoe stated “the problems of Denel are giving us sleepless nights and that is why we have appointed the Save Denel technical team”.
The team comprises industry body AMD’s executive director Sandile Ndlovu, Armscor non-executive director Dr Moses Khanyile, the chief executives of Denel (acting, at present) and Armscor as well as representatives from the departments of Public Enterprises and Defence.
According to Kudjoe the DoD asked Armscor to pay suppliers directly and ordered Denel to centralise all funding from it “to avoid money intended to equip our forces with the right equipment at the right time being used for salaries by Denel.”
Denel is struggling with liquidity and this affects its ability to pay salaries as well as complete projects for the SANDF. Project Hoefyster (new infantry fighting vehicles for the SA Army) is of particular concern, being years behind schedule. Denel is receiving capital from the State to stay afloat this money is earmarked to service debt and cannot be used for salaries and other expenses.
In his address to conference attendees, Mketi, on behalf of Kudjoe, stated “it is in the DoD’s interest to have a strong and agile defence industry. In light of reduced local demand, the sector needs to become leaner and tougher and promote new manufacturing methods, invest in fourth industrial revolution technologies like 3D printing and digital design, diversify into the commercial sector and come up with creative funding mechanisms”.
“From our side, the DoD consistently assists, hence the creation of the National Defence Industry Council (NDIC), which subsequently delivered the South African Defence Industry Strategy, the defence Broad-based Black Economic Empowerment Sector Code and the Defence Industry Fund which is looking to attract R1 billion in investment. The NDIC will focus on efforts on co-operating with other government departments, finalise alternative funding models, exploit Department of Trade, Industry and Competition (DTIC) incentives, use the Department of International Relations and Co-operation (DIRCO) and other departments to market South African defence products and leverage intellectual property.
“South Africa has developed numerous cutting-edge technologies and many competitive products, with examples in the fields of artillery, self-protection systems, mine-detection vehicles, secure communications, electronic warfare and radar systems, unmanned aerial vehicles (UAVs) and guided weapons. In light of DoD budget cuts, advanced technologies can be used as a cost-effective force multiplier and it has made some procurements of radars, UAVs, surveillance cameras and other technologies for border safeguarding and peacekeeping.
“I hope we can explore ways to unlock South Africa’s aerospace and defence potential, especially as we view the role of the military as a developmental force, both nationally and continentally. The DoD is here to support industry, as the industry is not only a DoD asset but a national one with value for other departments and government agencies.”
Mketi said the DoD was aware of frustrations and challenges experienced by industry over National Conventional Arms Control Committee (NCACC) matters “and are doing the best we can to alleviate the situation. Please bear with us.”
“We recognise the South African defence industry as our partner in supplying the national defence force with capabilities to protect the sovereignty of our country and for development in general.”