Denel has informed workers at its two divisions it was unable to pay staff salaries for this month, an untenable situation that trade union Solidarity and Numsa said was deeply concerning, as the state-owned arms manufacturer received almost R2bn in a government bailout. Denel is among state-owned entities (SOEs) hollowed out and repurposed to serve the interests of the politically connected during the state capture years. It is also among 27 SOEs that racked up R69.3bn in irregular expenditure over the past five years and R163m in fruitless and wasteful expenditure during the same period.
In his budget speech in May 2025, finance minister Enoch Godongwana allocated R59.7bn to defence and state security. Denel had been undergoing a turnaround plan that includes recapitalisation, having received R3.4bn in the past for it. Denel management informed employees at Denel Dynamics and Denel Pretoria Metal Pressings (PMP) this week it lacked the “financial resources to pay January salaries, which were due on 23rd”.
“This announcement has left workers distressed, anxious and uncertain about how they will provide for their families,” said Irvin Jim, general secretary of the National Union of Metalworkers of SA (Numsa). “Once again, workers are being forced to carry the burden of Denel’s leadership failures. Numsa strongly condemns Denel’s executives for allowing the company to reach this point, while workers remain the first to suffer the consequences of mismanagement and instability,” he said.
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“Since 2024, Numsa and other unions have participated in efforts to stabilise Denel, including serving on a task team mandated to develop a turnaround strategy to resolve the entity’s persistent financial crisis.” This vacuum in leadership has only been worsened by Denel’s operational and financial challenges. Jim said the task team produced a turnaround plan estimated to cost R120m, which the board approved. “As part of the task team, Numsa made concrete proposals including suggestions for how Denel can recapitalise itself. However, the executives ignored our suggestions, and this is why we reject any excuses from the management, because they have solutions, but they are not implementing them.” The continued absence of a permanent board had deepened governance instability and undermined accountability, Jim said.
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