The state capture period between 2015 and 2016 and the emergence of the Covid-19 pandemic in 2020 led to state-owned entity Denel experiencing a downward trajectory.
This downward trajectory also led to Denel losing its key customers.
This was revealed by Denel Group CEO Tshepo Monaheng on Friday when the state parastatal appeared before parliament’s joint standing committee on defence.
Presentation to parly committee
Denel was making a presentation to the committee with regards to its various divisions and support to the South African National Defence Force (SANDF).
“The 2015/16 state capture, coupled with the Covid-19 pandemic of 2020, resulted in Denel’s downward spiral. This included the loss of key customers. The extent of the damage was such that the entity could not be stabilised. This despite receiving a total of R2.38-billion in recapitalisation during 2019 and 2020,” said Monaheng.
He said Denel’s revenue fell from the peak of R8.4-billion in the 2015-2016 financial year to just under R1.5-billion in the 2022-2023 financial year.
“Denel was a well-recognised SOC (state-owned company) between 2010 and 2015. There was a stable board of directors and management. It was a profitable state entity and respected in the defence industry internationally.
“Denel had sought-after talent and was a leader in technology development. It was a symbol of good governance and a reporting system,” said Monaheng.
Loss of skills
Monaheng said some of Denel’s capabilities have been impacted by the loss of skills due to liquidity challenges.
He said plans are in place to restore capabilities such as system engineer and design authorities.
Monaheng said there are also plans to restore capacity through orders and technology projects.
He said Denel is working on executing the turnaround plan. And this aims to ensure the “stabilisation for sustainable capacity building and growth” at Denel.
Monaheng also said Denel wants to prioritise an ethical, high-performance culture. Also improvement of liquidity, the improvement and strengthening of governance and internal controls. Appointment of both management and technical teams and improving support for the SANDF and the security cluster. And raising prepayment guarantees and performance bonds for signed contracts.
He said Denel is working on investing in and developing young applied engineering skills.
