National army chief Lieutenant General Lindile Yam sharply criticised the government for the funding shortage, saying the army was even struggling to buy uniforms.

"These budget cuts impacts negatively on our force operations efforts," Yam told journalists at the army headquarters in Pretoria.

"There is a danger coming that seems no one is seeing here."

Yam said the army's defence budget was 28 percent of the GDP during apartheid, but has been whittled down to less than one percent of the GDP.

"We have gone to less than one percent and maybe we are going to zero, I don't know," said Yam, saying politicians were playing "dangerous games" with the budget.

Defence Minister Nosiviwe Mapisa-Nqakula has previously said that funding problems have been caused by the post-apartheid government prioritising spending on previously neglected poor black communities.

Yam, who took over command of the army two years ago, said South Africa was not immune to extremist attacks, pointing to an Islamist insurgency that erupted a year ago in neighbouring Mozambique.

"Look at what is happening in our neighbour. Terrorists... cutting people's necks. If it's in Mozambique it's here."

As one of Africa's military powerhouses, South Africa has deployed troops to peacekeeping operations in Democratic Republic of Congo (DRC) and in Sudan's Darfur region.

It currently deploys around 1,300 soldiers as part of a UN intervention brigade deployed in the strife-torn eastern DRC region.

Its army has also assisted with elections logistics in countries such as Madagascar.

"But we do not have the capacity to do that now... so we are also going to lose credibility of calling ourselves an African renaissance nation," Yam said, calculating that an extra 50 billion rand ($3.5 billion) was needed to lift standards.

The country's new finance minister, Tito Mboweni, is due to present his mid-term budget statement next Wednesday.