Part of Armscor’s turnaround strategy to generate more of its own funds and the state’s defence and security acquisition agency is looking at making better use of its assets – particularly property – in this regard.
“Asset sweating” was a term first used by chief executive Kevin Wakeford to describe this activity earlier this year. It has now gone as far as Armscor aiming to expand its landlord function, albeit only some years down the line.
According to the latest Armscor annual report: “In support of a financial turnaround, a framework for innovative funding solutions was developed, as well as proposal of an expanded treasury function and structure”.
“As part of the initiative to sweat existing assets, further engagements took place with Defence Intelligence (DI) regarding a property development project for a Defence Headquarters, which will be built on the land at Gerotek as the anchor tenant. Armscor has been formally tasked with this project”.
Asked for more detail, Armscor group executive: corporate support, Solomzi Mbada, said various feasibility studies are being conducted and it could take up to five years for the project to be completed.
At present SA National Defence Force (SANDF) HQ is housed in the Armscor building in the Pretoria east suburb Erasmuskloof. The Defence Ministry and Defence Secretariat is also housed in there with DI currently in a Pretoria CBD building. The net effect would be, once the new Defence HQ, as stated in the annual report, is up and operational, that Armscor gains a tenant – DI – and will provide office space and other business facilities to existing clients – the SANDF and the Defence Ministry and Secretariat.
No indication is given in the annual report as to whether the Ministry, Secretariat and DI will also eventually be housed at Gerotek, west of Pretoria just before Hartbeespoort Dam. The report does point out that “construction of a DI HQ building at Gerotek” is an activity it is focussing on.
Another component of the Armscor financial turnaround and business re-orientation is a sustainability unit. Its role, according to the annual report, is to fast track exploitation of opportunities identified for revenue generation.
“To this end engagement with various international and local stakeholders such as multi-national organisations, the SA defence industry and government departments have promoted Armscor services and follow-up on potential clients.”
Progress made includes brokering the sale of military equipment (no equipment is named in the annual report) for Nigeria and Zambia.
Another part of this wider revenue generation is increasing South African industry’s participation in UN procurement spend.
“A Team SA approach was adopted, as the view is to support not just defence, but the wider South African industry and a multi-organisational approach to opportunities. This approach is flourishing as Armscor, CSIR and Denel visited the UN Headquarters in New York to widen South African Defence participation in UN Field support. In addition, 26 UN defence attaches (sic) of African countries were addressed on further relationships, and possible partnering opportunities are being explored. The Sustainability Unit is focused on building relationships with the local defence industry and other African nations,” according to the report.