Shrinking defence budget has affected Armscor and forced change – retirees


A group of Armscor pensioners, some of them previously in senior management positions, are of the opinion the organisation is “more than somewhat changed” from what it was 25 and 30 years ago, with its turnaround strategy forced onto the defence and security acquisition agency.

According to Armscor chief executive, Kevin Wakeford, the “turnaround process is about creating an organisation that will ultimately be able to sustain itself financially”.

This is good, the pensioners maintain, because “Armscor has been forced to look at other sources of income to be able to maintain acquisition capabilities and support services for the SA National Defence Force (SANDF) and SA Police Service (SAPS)”.

They point out the national defence budget and the corresponding Armscor budget have experienced “substantial reductions in the last few years and there is no sign of any improvement in the foreseeable future”.

On Wakeford’s assertion that Armscor has to strengthen ties with the SANDF as its primary client, the retirees urge a careful approach.
“Don’t rush into it like a bull in a china shop. There are a number of possible pitfalls which could jeopardise successful implementation of the strategy,” the group, the majority of who dealt with top SANDF structures on acquisitions and support, say.
“The approval (for the turnaround strategy) appears to have been granted in terms of clauses 3(a) and 3(b) of the Armscor Act of 2003.
“Our thinking is the purposes and functions and Armscor are being stretched by riding on the back of these clauses but it looks as though Armscor is utilising the contents of clause 3(a) (iii) to its fullest extent”.

Wakeford sees the Armscor turnaround creating new and sustainable pathways for Armscor and it becoming a clear channel for the defence industry.
“Our aim is not to monopolise. It is to build smart partnerships, deepen collaboration with existing partners and help smaller entities that don’t have the balance sheet to go it on their own,” he writes in the Armscor newsletter titled “Inside Out”.

The man who has been in the hot seat for 14 months since taking over from long time acting chief executive Sipho Mkwanazi, sees Armscor’s sustainability and survival in taking an enabling role in the advancement of a competitive South African defence industry.
“Armscor has to think differently and become resourceful in its way of doing business.”

Wakeford recently told Parliament’s Portfolio Committee on Defence and Military Veterans (PCDMV) that “Armscor was becoming irrelevant and unsustainable,” adding the funding shortfall, via the national budget to the Department of Defence and Military Veterans (and the SA National Defence Force) created “an existential threat” to Armscor.

A turnaround based on Armscor and the SANDF being “a greater and visible asset to the national economy” was started. Another premise to ensure the turnaround’s success was that benefits derived from the South African defence sector go beyond military and technology advances. They include, according to Wakeford, domestic employment, high technology skills and economic growth.

Armscor’s mandate is to be of service to the Department of Defence, acquire defence materiel on behalf of the DoD, provide research testing and evaluation capability to the DoD and hold strategic capabilities on behalf of the DoD.

Armscor may also provide such services to other departments or governments on a regulated basis and may enter into commercial activity, subject to approval of the Minister of Defence. Armscor is busy with its own water purification system at present.

Wakeford recently said that Armscor’s turnaround strategy involves unlocking Africa’s defence growth potential and exploring new defence pathways. Measures include finding African defence partners, using the defence sector to drive economic and job growth, fostering public private partnerships, promoting defence solutions worldwide and supporting peacekeeping operations in Africa.

One of Africa’s biggest threats is endless conflict, and consequently Africa has the most United Nations peacekeeping operations with cumulative budgets of several billion dollars. “How can we get a small portion of this huge spend?” Wakeford asked. “We need to collaborate, we need to work together. To fight over the crumbs of the domestic economy is not a good approach.”

Wakeford believes that the local defence industry is not completely focussed on African requirements, which “should be our biggest market. Africa will be our single biggest trading partner.” He said if the defence sector starts consolidating and working together and listing on stock exchanges it can add to the African and South African economies.
“What we’ve done this far, with registering with the United Nations, what we’ve done with Nigeria [in July 17 South African companies took part in the first Nigeria-South Africa Defence Industry Seminar in Nigeria]…we’re going to become a clear channel for defence sector…We are your partner for peace, stability and development in Africa.”