Denel is one of South Africa’s state parastatals or otherwise known as State Owned Enterprise (SOEs). Denel carries an important mandate as it is responsible for arms manufacturing, procurement and the maintenance of defence equipment for the South African National Defence Force (SANDF). Denel and the SANDF are thus inextricably linked entities. However, the findings of the State Capture report that were compiled by the Zondo Commission revealed that Denel is fraught with a multiplicity of governance challenges and is inevitably on the brink of collapse. The challenges include financial mismanagement, irregular and wasteful expenditure, corruption, and maladministration, among others. The state of Denel is proving to be a thorny challenge for the SANDF’s efforts to improve its defence capabilities especially during massive budget cuts. Poor governance at Denel by implications practically cripples and complicates SANDF’s operations. Therefore, it implies that the SANDF needs to look elsewhere for alternative suppliers in order to carry out its constitutional obligations of safeguarding South Africa’s national sovereignty against any form of external aggression or security threat. This is proving to be a cumbersome task since both parties are constantly faced with unending governance challenges. Using frameworks such as ‘participatory’ governance theory, networked governance, and neopatrimonialism theory, this chapter seeks to document the challenges and offer a comparative analysis of international best practices in governance. To achieve this, a thorough and critical engagement of experts’ analysis (document analysis) on the matter at hand will be done. In doing so, the chapter provides context-specific responses which might be sustainable in the long run and will seek to contribute to emerging debates regarding challenges facing SOEs in South Africa.