Denel’s positioning awaiting DR, Presidential Review outcome


Minister of Public Enterprises Malusi Gigaba says the placement of Denel – as an entity reporting to his department or the defence department – is not the most urgent issue facing government with regards to the state arsenal. Achieving and maintaining financial sustainability after years of losses is far more important, he intimated.

Minister of Defence and Military Veterans Lindiwe Sisulu in July 2009 told Members of Parliament Denel was to be “realigned” and brought back under control of the defence force. “We have to serve notice… that we intend to negotiate Denel back into the ambit of the defence force,” she said, opening debate on her department’s budget vote in the National Assembly.

Sisulu said she had held discussions on this matter with then-Public Enterprises minister Barbara Hogan. “[I have] indicated that, at the very least, we need to immediately embark on a strategic realignment of Denel. Denel is a strategic security manufacturing asset for defence, and we would like to retain it as such,” she said. “I am aware that the defence industry requires an exhaustive interrogation — both Armscor and Denel will be part of this, which must extend to every sector of the industry. This should be conducted in a way that will subsequently produce effective command and control measures and effective turn-around.”

But the talks were overtaken by the appointment in September 2009 of an Inter-Ministerial Committee (IMC) co-chaired by Hogan and finance minister Pravin Gordhan to conduct an internal government review of state-owned enterprises (SOE) “to determine how government can strengthen alignment between its development objectives and the strategic role to be played by SOEs in the economy.”

Then in May last year, President Jacob Zuma appointed a Presidential SOE Review Committee (PSRC) under the chairwomanship of Mangwashi Victoria “Riah” Phiyega to independently probe SOEs. Subsequently asked of the relationship between the IMC and the PSRC, Zuma said “I have decided to set up a two-pronged review of SOEs that will culminate in a united government position on the role of SOEs in supporting government’s developmental agenda in the period ahead. The two processes are complementary and will culminate in a single synthesised report for consideration and decision–making by Cabinet.” Phiyega was given a year to complete her task. That deadline came and has passed.

Gigaba last week said the placement of the Denel “cannot pre-empt the process.” In addition, Gigaba says the ongoing Defence Review is a “matter of the keenest interest” and will also have bearing on the positioning.