South African arms maker cannot pay salaries

By Russel Padmore

The financially troubled state-owned South African defence manufacturer Denel has warned that it cannot pay salaries to its staff this month.

However there could be a boost to the country's arms industry, after a change to rules on exports of weapons.

Until this month the government had the right to carry out inspections, to ensure arms were not being transferred to a third country, but that requirement is being relaxed.

It is thought the new rules will smooth the way for the sale of weapons to countries like Saudi Arabia, or the United Arab Emirates (UAE), which considered the requirement to conduct an inspection as an infringement of their sovereignty.

It could unlock sales worth billions of dollars to nations in North Africa or the Gulf.

South Africa's defence industry provides thousands of jobs, but companies like Denel have seen their business stall, because of the need for other countries to permit inspections of weapons supplied to them.

The country's arms industry manufactures defence products from ammunition to missiles and armoured vehicles, for military forces around the world.

In recent years Saudi Arabia and the UAE have bought at least a third of South Africa's exports of weapons, at a time when they have been engaged in a war in Yemen.

Last week, Denel revealed the coronavirus pandemic and lockdown measures had brought its operations to a standstill.

Denel has a joint venture with Rheinmetall of Germany, which also stands to benefit from the relaxation of rules on exports.

This article originally appeared on BBC News

Photo: AFP