Defence watchers are lukewarm about President Cyril Ramaphosa’s first Cabinet reshuffle which brings no change to the political leadership in the Defence and Military Veterans Ministry but there are upbeat pronouncements about the new Public Enterprises Minister.
Ramaphosa saw fit to leave both the defence minister (Nosiviwe Mapisa-Nqakula) and her deputy (Kebby Maphatsoe) in place but dismissed Lynne Brown, after what many term was a disastrous tenure at Public Enterprises, and brought in former finance minister, Pravin Gordhan, to oversee state-owned enterprises.
Defence analyst Darren Olivier maintains the retention of Mapisa-Nqakula and Maphatsoe is “a bad idea” but sees Gordhan’s appointment along with the recall of Nhlanhla Nene to finance as “extremely positive”.
He expects Denel, one of the State-owned enterprises that has performed badly on former minister Brown’s watch and been dragged into the state capture mess, to have a new board shortly now Gordhan is at the helm.
Trade union Solidarity congratulated Gordhan on his appointment as Minister of Public Enterprises and appealed to him to start an urgent investigation into “serious and rampant financial mismanagement” at the defence and technology group.
The union’s deputy general secretary Deon Reyneke said in a statement Solidarity communicated with former minister Brown “several times over the past week regarding problems at Denel”.
“It appears our concerns fell on deaf ears as nothing has yet been done apart from the former minister informing us discussions at Denel would continue,” he said.
Reyneke called on Gordhan to “speedily come up with concrete steps to halt the downward trajectory experienced by Denel”.
Denel was granted an emergency government loan of R580 million in December to pay its 4 000 employees and suppliers in January. National Treasury was reported at that time as saying the guarantee was to resolve Denel’s “immediate funding crisis”.
The defence and technology conglomerate’s latest annual report has it posting a profit of R333 million for the 2016/17 financial year, down from the R395 million the previous financial term.
“The decrease for the year under review can be attributed to softer local demand, as well as foreign exchange losses of R232 million mainly relating to the revaluation of revenue recognition debtors, partially offset by growth in export sales,” the company stated. As a result, “we have recognised certain of our entities and cost structures require repositioning” the annual report said.
Solidarity is concerned the “repositioning” will result of job losses which, it maintains, can be as high as 700.