Chairperson, I want to applaud the President and the Finance Minister on realising the importance of giving support to this very strategic entity, Denel, which is universally renowned for the state-of-the- art and sophisticated products it has to offer the defence fraternity.
Denel cannot ship out. Indeed, there are those who feel that Denel should be privatised and should not be given state funding. But the majority in our portfolio committee appreciate that the new leadership at Denel has a major responsibility to restructure it and make it a competitive, viable and world-class entity.
It is a fact that we as a nation do not face any external military threats because of the fact that we have made more friends than enemies since the demise of the apartheid regime. The picture that was painted last year by the new leadership of Denel, of the need to fundamentally transform it, seems reasonable to us.
We would like to call upon all relevant stakeholders to work together and do their utmost to reconstitute Denel and ensure that it serves the national interests and that it is commercially viable on a sustainable basis.
We believe the CEO when he says that part of the problem has been lack of clarity among the government and other stakeholders of the exact role Denel should play to the extent that there is convergence among the major stakeholders on the exact role of Denel and greater co-operation among them. We appreciate that.
If there is disagreement on this matter, particularly within government, surely there should be more political and financial support for Denel too, especially as we are told that defence companies globally rely on Denel.
The recent R2-billion injection by National Treasury to Denel is a positive move in that it will not only sustain jobs, but will also ensure that new skills in science and technology are acquired. This eventually enhances development, which will enable us to meet our economic growth rate goal of 6% by 2010.
In our interaction last year the CEO, Mr Liebenberg, said that fixing Denel included making Denel a profitable and dynamic organisation commercially; delivering consistent growth; attracting, developing, retaining and appropriately rewarding world-class skills; achieving world-class productivity; focusing on areas in which Denel can compete credibly; partnering with state agencies to meet the country's defence needs; and competing in the open market, which means behaving like the best in the open market.
Denel cannot achieve world-class results with a subsidy mind-set. Anything other than world-class will not cut it in this highly competitive environment. Denel needs to decide on what it is and focus on a game plan.
Global defence procurement is a US $360 billion market. Many of the global defence contractors such as Denel find it almost impossible to serve the United States, for example, and the Nato countries, which have a closed bidder and tender process. The USA and Europe are also trying to expand their markets to areas previously served exclusively by Denel, such as the Middle East, the Far East and South America. Independent contractors such as Denel are forced to become reliant on domestic markets.
To succeed, Denel should pursue a strategy based on prime contracting here at home, and the export of systems and components through selective equity partnerships and alliances. A process is under way to evaluate alliance opportunities and drive internal improvements across all business units.
In conclusion, this time round we as a committee are going to closely watch Denel's performance after its R2 billion allocation. Denel is the only state-owned enterprise getting money directly from the national fiscus. Hence, our committee will have a much more direct oversight role over Denel.
We need to be clear about what the money is going to be used for and we are going to monitor that it is being used for the correct purpose. We will be meeting with Denel very soon to make it clear that we are going to monitor them regularly. Hon members, ladies and gentlemen, the ANC supports this Bill. I thank you. [Applause.]