By REGINALD KANYANE
21 June 2025 – The Joint Standing Committee on Defence has urged the Minister of Defence and Military Veterans to strengthen engagements to find workable solutions around the challenge facing Denel of acquiring guarantees necessary to deliver on contracts required to improve the liquidity challenges facing the entity. The committee held an introductory meeting with the senior management of the entity to assess progress in implementing the turnaround strategy of the entity.
The Chairperson of the Committee, Phiroane Phala said, while the committee acknowledged the challenge with the unwillingness of the financial institutions to issue guarantees, mainly due to administrative and governance challenges, it is necessary to find solutions as a means of breathing new life into the entity. Phala said the committee highlighted the importance of Denel in supporting the South African National Defence Force (SANDF) to deliver on its mandate, skills development as well as potential impact on economic growth.
“While finding solutions to address the guarantee challenge and the importance of that, the overriding issue is the stabilisation of the entity, re-establishing the reputation of the entity on the global defence market, and improving the liquidity of the entity.
“The skills drain occasioned by the challenges faced by the entity must be addressed to ensure that there are adequate skills to deliver on any probable contracts. Denel has to be supported to exploit the huge potential inherent,” he said.
Meanwhile, the Co-Chairperson of the Committee, Malusi Gigaba said they welcome the assurance by the Minister that processes are underway to appoint a new board following the expiry of the current board’s term of office. Gigaba said, despite this, the committee highlighted that the shareholder representative must provide a long-term growth plan on how Denel can contribute to the skills base development and economic development of the country.
“The committee also welcomed the assurance that there is improvement in the alignment between Armscor and Denel, especially on the finalisation of Project Hoefyster.
“The committee highlighted that the support Denel offers to the SANDF is critical to create a platform for exposure to the international market. Any potential contract will be dependent on Denel proving the extensive use in the home country,” said Gigaba.
Gigaba further said it is on this basis that the alignment between Armscor and Denel is critical. He added that despite this, the committee highlighted the long-term risk posed to Denel and the entire defence industry by continuing underfunding of the SANDF.
“The committee has, since its establishment, highlighted the need for a reconsideration of the dwindling budgets to the SANDF as it has unmitigable impact on the defence industry and the ability of the SANDF to acquire and maintain necessary capabilities to safeguard South Africa’s sovereign integrity.
“The committee welcomed the information that there are green shoots in the stabilisation of the entity. For example, the committee was informed that Denel is now profitable despite its debt burden and skills shortages,” he said.
The Guardian 