Parliament, Saturday, 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. “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,” said Mr Phiroane Phala, the Co-Chairperson of the committee.
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, reestablishing 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,” said Mr Malusi Gigaba, the Co-Chairperson of the committee.
The committee welcomed 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. 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. It is on this basis that the alignment between Armscor and Denel is critical,” Mr Phala emphasised.
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.
Meanwhile, 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. The committee was of the view that the medium to long-term plans provided a semblance of hope. In spite of this, the committee committed to enhanced oversight to keep the executive accountable to the promises made to cultivate a healthy order book, deliver on contracts and develop skills in the country.
Furthermore, the commitment to invest in research and development was a welcome initiative to ensure that South Africa regains its competitive advantage within the defence industry on the global stage. “Research and development is necessary not only for competitive advantage but also to increase the skills base necessary for economic growth. In all its endeavours, Denel must always ensure that it contributes to skills development,” Mr Gigaba emphasised.
The committee also raised alarm with the lack of gender parity in the executive leadership of the entity. The committee has urged the company to prioritise initiatives to attract females into the business and develop well-thought-out succession plans to overcome this shortcoming.
ISSUED BY THE COMMUNICATION SERVICES ON BEHALF OF THE CO-CHAIRPERSONS OF THE JOINT STANDING COMMITTEE ON DEFENCE, MR MALUSI GIGABA AND MR PHIROANE PHALA
For media enquiries or interviews with the Chairpersons, please contact the committee’s Media Officer:
Name: Malatswa Molepo (Mr)
Parliamentary Communication Services
Tel: 021 403 8438
Cell: 081 512 7920
E-mail: mmolepo@parliament.gov.za
Arrange a tour