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Denel warns of big funding gap

For key capabilities.
Image: REUTERS/Siphiwe Sibeko

South African state arms firm Denel said on Wednesday it faced a funding gap of around R2.75 billion ($168 million) over the next five years for key capabilities such as ammunition production and aircraft maintenance.

Denel, which makes military equipment for South Africa’s armed forces and export, has long been in the throes of a liquidity crisis which has been aggravated by the Covid-19 pandemic.

It is one of a handful of struggling state companies the government has been keeping afloat with bailouts.

Interim Chief Executive Talib Sadik told a parliamentary committee that Denel had asked the defence ministry to provide R683 million in the current 2020/21 financial year to cover the funding gap for “sovereign and strategic capabilities,” which if lost could threaten South Africa’s ability to defend itself.

A presentation to the committee showed funding gaps of R635 million, R600 million, R431 million and R400 million in the subsequent four years for sovereign and strategic capabilities, which also include things like missiles.

The request for defence ministry support this financial year is on top of the R3.8 billion that Denel is seeking from the National Treasury over 2021/22 to 2023/24.

Sadik said on Wednesday that Denel was taking steps to cut costs, reduce debts and dispose of non-core assets.

But he said difficulties paying full salaries this year had led some important technical staff to leave.

Denel’s presentation showed it owed R391 million in unpaid salaries and statutory obligations like payments to its employee pension fund.

State asset manager the Public Investment Corporation recently rolled over R2.5 billion of Denel bonds for a further 12 months, and the government disbursed more bailout cash to help Denel repay debt, the presentation also showed.

On top of that Denel is due to receive a further R271 million from the government this financial year.

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“…those capabilities are ones that if lost could threaten South Africa’s ability to defend itself”.

Defend against who & what??

The ‘enemy’ (being corrupt ANC) already inflicted huge economic damage on to SA the past 25 yrs, thanks to poor leadership, cronyism, corruption, etc. Does it matter if a foreign power wants to take over SA?

Who is the real enemy (of economic growth)? Take the SAPS Paul Roux for example….SAPS vehicles being used in cahoots with theft-syndicates, to further stock theft from law abiding Freestate farmers. Talk about the govt being against productive citizens. No, we have an “enemy within”.

In fact, with the dire state of SA, may in fact be our best defense…being a deterrent in itself that this declining country is not worth it to fight over.

Anyway, many African maritime EEZ zones already BELONG to China. They practically can fish unhindered.

(ARMSCOR/DENEL was well funded in the apartheid years, as the NP-govt spend 5X the current-day budget on military. Now the war’s over…so they say. And along with that cutting of defense budgets. DENEL, sadly a (past proud) animal from a bygone era fighting for existence/relevance. The days are gone when “whole systems” were developed in once single country, due to cost. Partnerships with other global arms manufacturers tend to work better.)

…and in part Denel’s own fault: here we are as SA civilians (a ready market for small arms), and I enquired to order two DENEL Y3 Automatic Granade Launchers (40mm) one for me, and for the lovely wife.

Plus five ammo boxes containing those 20-round belt clips. I specified:
(i) 40mm “Target Practice TRACER”….to entertain the neighborhoods kids at night time, and
(ii) 40mm “High Explosive Dual-Purpose” (HEDP) rounds…because some taxis just don’t bother to stop at intersections.

And I was bored out of my skull during Level-4 lockdown.

https://en.wikipedia.org/wiki/Denel_Y3_AGL

Denel’s response was “we do not sell to the civilian market, only military clients”. I mean, really?? No commercial savvy…

Can anyone imagine trying to get resupply whilst fighting a war having Denel as a supplier- your armed forces are neutralized, dead and buried before your arms order leaves their despatch, guaranteed!!!

…”Denel board chairwoman Monhla Hlahla said: “I believe that Denel can be saved if we just do it fast.””…

In other words, “is braw-ken…”

Correct, AND like they can do anything fast except loot the place!? First sign of the stumbling block that they will never get over, CLOSE IT DOWN!!!

End of comments.

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