South Africa’s road to ruin or salvation?

South Africa’s investigating unit (SIU) has been inundated with new cases revealing staggering corruption in the police, the public broadcaster, the land reform and housing subsidy systems, state departments and municipalities, a parliamentary committee was told last week. At the same time political economist and commentator Moeletsi Mbeki on an international website poses the question: “Will corruption lead the country to ruin or will it lead to the ANC's own ruin?

SIU head Willie Hofmeyr told Parliament's portfolio committee on justice: "We have received a flood of new cases. Some of them are very big."

He outlined 16 new proclamations received by the anti-graft unit in the past financial year, the most ever in its 15-year history.

Hofmeyr’s report prompted the Congress of South African Trade Unions (Cosatu) to declare in a statement that it is “shocked, yet not surprised,”

It congratulated the SIU for its “determination to tackle what is clearly a massive and widespread growth of the cancer of crime and corruption within our public service and state-owned enterprises.”

Independent from the SIU report the reputable international website openDemocracy also last week carried an article by Mbeki in which he declares: “The presence of corruption from the top to the bottom rungs of the ANC government has detrimental consequences for the South African public sector and economy. These consequences may have important electoral implications for the ANC.”

Describing what five years ago looked pristine in Tunis, the capital of Tunisia he writes “we now know better - appearances can be deceptive,” and adds;

“South Africa and Tunisia are at the opposite ends of the vast African continent but share some commonalities.  One of the sparks that ignited what turned out to have been a tinderbox despite its many positive economic indicators was the issue of corruption.”

There the president’s family ... commanded vast amounts of wealth through business deals.  “Sounds familiar?  During his 23 years as President, Ben Ali’s family came to have fingers in many pies – banking, tourism, telecommunications, distribution, air transport, car dealerships, publishing and influence peddling in general.

“South Africa’s First Family has been in power for less than two years and already sports iron ore prospecting rights in an existing iron ore mine, oil wells in the Congo, shipping businesses, gold mines and is soon to acquire billions worth of shares in South Africa’s largest steel maker ArcelorMittal to name but a few businesses Zuma’s family is engaged in since he became President in 2009,” he writes.

He notes that “Cosatu has woken up to the fact that corruption, even by its friends threatens its members’ livelihoods.  In economic terms corruption is an extra tax that must be added to the normal cost of production.  This makes the products which carry that extra tax more expensive relative to similar products produced elsewhere, where there is no such an extra cost.

“Leaving aside the very important moral and political issues not to mention the killings that are happening in the First Families’ gold mines, corruption therefore makes South Africa’s products uncompetitive globally, a road to ruin for South Africa as a country and to investors and workers in the affected industries.”

Corruption Watch

Cosatu convened a conference of civil society organisations to map out a strategy for combatting corruption.  This infuriated the ANC leadership which denounced the conference as an initiative for promoting regime change.

The conference agreed that Cosatu spearhead an initiative to register an anti-corruption civil society organisation to be called Corruption Watch. “ This process is underway.  South Africa is signatory to the African Union’s anti-corruption convention which stipulates that government work with civil society in the fight against corruption.  So far this has not happened but must be expected to happen as Cosatu and friends roll out their initiatives.  “This will surely be yet another point of friction between the ANC and its ally,” he writes.

He also points out that corruption is not confined to the top of the government.  It runs from the top to the bottom

“It was reported at the beginning of last year by Willie Hofmeyr ... that 400 000 civil servants were getting welfare payments to which they were not entitled.  A further 6000 senior government officials had failed to declare their business interests.

“The Minister of Human Settlements, Tokyo Sexwale revealed that 923 corrupt officials in his department had been brought to book over various scams, including the construction of thousands of substandard low-cost homes for the poor many of which were unfit for human inhabitation.

“Finance Minister, Pravin Gordhan at the end of last year said the government was investigating possible tender and procurement fraud involving up to R25-billion.  Other sources estimate that R30-billion of South Africa’s R150-billion public procurement budget is lost to corruption.

“Extensive corruption in all levels of government is leading to internal conflicts and even assassinations amongst officials especially at the local government level.  In Mpumalanga it is estimated that a dozen elected officials have been assassinated in connection with illegal procurement-related activities during the last two years.”

Consequences

Mbeki goes on to list some of the multi-faceted consequences of public sector corruption, including service delivery protests by poor South Africans who are locked in townships and informal settlements; and dissatisfaction with service delivery from the government by the poor has important electoral implications for the ANC.

He points out that despite the perception in some circles that it is working-class people that keep the ANC in power, the “core constituencies that keep the ANC in power are the poor and unemployed Africans.

“In return for their vote the poor receive all sorts of hand-outs from the ANC government that go under the generic name of social grants.  These social grants have been growing steadily since 1997-98.  Today they encompass over 14 million people and are scheduled to grow to 18 million in 2013 and they constitute about 15% of government revenues.

Conclusion: ruin or salvation?

“Twenty years ago the famous South African scenario analyst Clem Sunter said South Africa was approaching a cross-roads: one road was the high road and the other was the low road.  The high road, which obviously he recommended, he said would lead to democracy, political stability and prosperity.

“Today South Africa is approaching another critical point in its history.  In 1994 the leaders of South Africa chose the high road and adopted an inclusive political and economic model. Today the ANC government seems determined, despite its rhetoric, to follow the low road,” he writes and cites that

according to a recent report by the United Nations Conference on Trade and development foreign direct investment to South Africa dropped by 78% in 2009;

The recent Survey of Mining Companies 2009/2010 by Canada’s Fraser Institute, shows that South Africa is slipping constantly over the last few years in the league tables of mining countries.

One of the most glaring “follow the low road policies” of the government is the Kumba iron ore saga where the Department of Mineral Resources has allocated prospecting rights to a shelf company owned by the President and Deputy President’s families and their friends -- prospecting rights to an existing iron ore mine owned by an Anglo American plc subsidiary Kumba Iron Ore Limited.

“The important question is whether by following the low road the ANC will lead the country to ruin or it will lead to the ANC’s own ruin.  An equally important question is will the ANC’s ruin be the salvation of the country as happened with the demise of tae National Party, the pioneers of the apartheid system?”