The Democratic Alliance (DA) notes that Government has extended a R1.8 billion bailout to the money pit that is Denel. We are of the view that this billion Rand 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.
An incredulous amount of the people’s money have been spent on SOEs and yet the public is getting very little in return.
It is no longer rational or feasible for Government to have full ownership of Denel and it should be partially privatised. There are many defense companies in the world that would be interested in buying off shares and Government should explore these possibilities.
Bailouts provide temporary relief to the state-owned entity in question, but cause permanent damage to the national fiscus. By privatising this entity, we will reduce the impact of government guarantees on the fiscus, promote competitiveness, improve efficiency and stimulate job creation.