Can SA Survive The Callous Curse Of Curruption?

A growing body of research warns that South Africa is on the verge of becoming dysfunctional, but there are glimmers of hope as the government finally starts shifting into a higher gear.

- Mariam Isa

Alarm bells are ringing as evidence mounts that it may take years before South Africa bounces back from its deepest economic contraction on record, with a recovery lagging well behind other countries hit both by lockdowns to curb the spread of Covid-19 and the toll which those measures have taken on global trade and growth.

The real culprit is not the pandemic itself but the policy paralysis which, for more than a decade, has blocked the private sector investment that could free the country from a debilitating low growth and rising debt trap, aptly described by finance minister Tito Mboweni in June as the “jaws of the hippopotamus”.

Lack of consensus among the groups which help formulate official policy – government, business and labour – together with a long list of regulatory hurdles, are widely seen as the reasons for the logjam. But scratch a bit deeper and it becomes clear that corruption, more tactfully known as rent-seeking, is the underlying problem.

Corruption not only raises the cost of business and increases inefficiency, it affects the regulatory framework itself because of groups with conflicting interests battle for the outcome which will benefit them the most – leading to delays, poor decisions, and policy U-turns. This is not what SA needs as it battles to extricate itself from a crippling recession which began last year.

“Corruption is a tax on the economy, it’s a leakage in the fiscus which never comes back. That’s just looking at it from a public finance point of view,” says Alexander Forbes executive chief economist Isaah Mhlanga. “But it also has an impact on investors who are looking at options to generate returns.”