Unavoidable costs ruining the SANDF


Unavoidable costs, mostly for salaries, are taking up ever-more of South Africa’s shrinking defence budget, leaving no funds for training, maintenance or to acquire much needed equipment. That’s the word from defence analyst Helmoed-Römer Heitman after the release, last week of a new set of figures illustrating the problem.

According to a Ministry of Defence written answer to a Parliamentary question, the SA Navy is spending 60% of its budget on personnel, the SA Air Force 35.71% and the Military Health Service 64.5%. The answer did not provide details on the SA Army, despite this being requested.

The MoD said the “SA Navy’s total allocation to run the Maritime Defence Program, over which the Chief of the Navy has the responsibility and accountability, for FY 2010/11, is R1 932 639 338.” The spending percentage breakdown is as follows:

Personnel: R1, 154,267,038 = 60% of the allocation.

Operating: R778, 375,074 = 40% of the allocation.

The answer adds funds allocated for maritime defence-related projects for FY 2010/11 is R192 591 000. “The Chief of the Navy has no jurisdiction over these funds in the execution of the Maritime Defence Program. However, when these funds are pooled together for executing all matters maritime within the DOD, the total is R2 125 230 338. The percentage breakdown is then as follows:
– Personnel: R1 154 267 038 = 54% of total allocation.
– Operating: R778 375 074 = 37% of total allocation.
– Capital: R192 591 000 = 9% of total allocation.

The Treasury Estimates of National Expenditure (ENE) released in February showed the total Maritime Defence programme accounts for 7.8% of the department’s R30.7 billion budget, or R2 179 822. The ENE notes the navy budget has decreased from R2.6 billion in 2006/07 to R2.2 billion in 2010/11 “at an average annual rate of 4.7%, due to the commissioning of the frigates and submarines between 2006 and 2009.”

Exact figures were not provided for the SAAF. However, the MoD answer notes personnel costs for the current financial year is 35.71% of the total, operating costs are 28.01% and capital costs stand at 36.29%. “If the capital funding for Special Defence Package (SDP) aircraft, which is not part of the normal allocation of funding for capital acquisition, is omitted from the calculation the figures are personnel 45.86%, operating 35.97 %, and capital 18.17 %.” The SDP aircraft are the 26 Saab Gripen and 24 BAE Systems Hawk Mk120 fighters acquired for R26 billion in 1999.

The ENE posts the SAAF budget at R6 059 126. It adds the “Air Defence programme accounts for 26.2% of the department’s total expenditure, and increased from R7.3 billion in 2006/07 to R9.1 billion in 2009/10 at an average annual rate of 7.6% and then decreases to R8.4 billion in 2012/13 at an average annual rate of 2.6%.

The SAMHS budget for 2010/11 is R2 671 296 180. Of this personnel costs are R1 722 887 429 or 64.5% of the total. Operating costs – goods and services – will consume R888 021 368 or 33.24% of funds, while R49 331 272 or 1.85% is available for capital and R11 056 048 (0.41%) for “transfers”. However, the ENE puts the SAMHS budget at R2 770 215. The reason for the discrepancy between the Treasury and MoD figure is not known. The ENE adds the Military Health Support programme accounts for 8.1% of the department’s total expenditure, “which increases from R1.7 billion in 2006/07 to R3.2 billion in 2012/13, at an average annual rate of 11.1%.

The ENE put the SA Army budget at R9 982 892 or 29.25 of the defence budget. It adds the “Landward Defence programme accounts for 29.2% of the department’s total expenditure, in which expenditure increases from R6.4 billion in 2006/07 to R11.1 billion in 2012/13, at an average annual rate of 9.5%.

Heitman comments the Navy’s figures “show just how out of balance things are, with far too little for operating and capital budgets.” He says the accepted formula is 40:30:30, with 40% for personnel costs, 30% for operating costs and 30% for capital. “…also, of course, the breakdown does not reveal that the overall amount is far too little (the SAN should, arguably, get 20-25% of a bigger overall budget) and that salaries for key rank groups remain low.”

He notes the SAAF ratios are closer to the norm, “but the same problems apply as for the Navy.” Regarding the SAMHS he says he would expect “a higher ratio of personnel costs and lower ratio of capital costs than the combat services, so there is no surprise there except insofar that the capital portion is very low, even against that background.”

The overall problem, he says, “remains that we are underfunding the SANDF to the extent where unavoidable costs take up most of the budget, leaving no funds for proper training or maintenance or to acquire the needed equipment. The SANDF is eating itself, and that cannot go on for ever.”

Pic: A striped Mamba MRAP at the SA Army Combat Training Centre, Lohatlha, September 2009