The South African government’s decision to bail out its cash-strapped arms manufacturer Denel has angered the country’s main opposition, which says the move is a waste of taxpayers’ money.
The company, which faces cash-flow challenges that have sometimes resulted in staff getting their full salaries late, on Saturday confirmed receiving a US$129 million recapitalisation from the government to keep its operations running smoothly.
Denel group chief executive Danie du Toit said the recapitalisation of the arms maker resulted from tangible progress of detailed plans to restructure the state-owned business, enter into strategic partnerships and find new markets for its high-technology products and solutions.
“We are grateful for the unwavering support that we receive from our shareholder, the government, and National Treasury.
“It demonstrates a confidence at high level for the measures taken by the new board and management and a commitment to support us through the next stages of the turnaround,” Du Toit said.
But not so fast, according to opposition Democratic Alliance’s Natasha Mazzone, who said on Saturday that throwing millions of dollars at Denel would not fix the troubled state firm which needs an overhaul.
Describing the report that the government had the bailout to Denel, which she referred to as a “money pit”, she added: “We are of the view that these millions of a bailout for a defunct state-owned entity is not sustainable.”
“Simply throwing money at Denel won’t fix it. The arms manufacturer needs an overhaul, including privatisation, to stop it from wasting people’s money,” Mazzone said.
NM/jn/APA