The cancer and cost of systemic corruption in South Africa

The facts of ‘state capture’ show that, while there are few places in the world where corruption is entirely absent, in South Africa under a corrupt ruling party, the impacts on the wider economy and the functioning of the state have been profoundly damaging.

Beginning with the most fundamental metrics, South Africa’s (SA) economy has weakened, almost from the minute that former president Jacob Zuma took the reins of power over the ruling African National Congress (ANC) in 2008.

That year, SA’s sovereign debt was at an historic low of 23.5 percent of gross domestic product (GDP).

By the time Zuma left office a decade later in 2018, the ratio of debt to national income had more than doubled to 51.59 percent.

That figure has grown dramatically since, largely due to Covid-19, shooting up from 56.3 percent in 2019 to 69.4 percent in 2020.

In 2022, the debt ratio sits at a hair over 70 percent, virtually the same level as its all-time high of 2021, at the height of government borrowing to deal with the coronavirus pandemic.

In the same period, the country’s sovereign debt rating – a measure of its creditworthiness, as assessed by internationally used ratings agencies – SA went from a creditable and respectable BBB+ to the ‘junk’ status of BB-. This means every loan costs significantly more and pushes the country towards defaulting on national debt serving.

National default has happened a few times in the modern era, each instance bringing a full economic ‘meltdown’, sky-high inflation, loss of savings and property by many who had accumulated some wealth, and long-term economic damage.

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As of 2021/22, total SA government debt and liabilities were about $239 billion, and taking in government guarantees to troubled entities such as intermittent power supplier Eskom, the country's debt-to-GDP ratio in October 2020 was calculated at 82.76 percent by the International Monetary Fund.

It is a startlingly high figure and means SA is but a few steps away from defaulting on its sovereign debt and triggering a collapse in the value of its currency and a crisis for every citizen.

Even without a full-scale economic meltdown, it is expected that the current formal unemployment figure of around 34 percent will have risen to at least 40 percent by 2030 – and that’s not counting the additional 10-11 percent of employable adults who have given up looking for a job.

The ‘good’ news, if there is any in this gloomy outlook, is that the international ratings agencies have, at least for now, reversed a long series of downgrades and improved SA’s previous outlook from negative to stable.

Ratings agencies consider ‘sentiment’ but do not use it in their calculations, indicating that there is “real hope for the South African economy”.

But not if it falls back into the hands of kleptocrats, which will certainly see another flight of foreign investment, making all citizens immediately poorer, and putting the country on track to becoming what some have predicted will be “another Zimbabwe”.

Also helping a little is that roughly 90 percent of the national debt in 2019/20 was denominated in the rand, thereby reducing borrowing risk due to currency fluctuations. In September 2020, around $157 billion of SA's national debt was externally owned.

But as of December 2021, the share of domestic bonds held by foreign investors was down to 28.2 percent, a decline to a 10-year low.

One could skip reading all the figures and, in summary, say that South Africa Inc is all but broke, just like the ANC itself, the party repeatedly failing to pay staff for months on end due to lack of funds.

This situation has been driven by wayward governance, looting of public funds and mismanagement, to the point that SA has been pushed to the brink economically, Covid only an accelerator of a process already underway for a decade or more.

Analysis below the national level shows a similar picture.

Hardly any of around 200 state-owned enterprises (SOEs), all fully controlled by the ANC government, are breaking even, most losing money annually and needing large bailouts.

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Without yet another such bailout, South African Airways has failed, while state power-producer Eskom owes some $24.25 billion, most underwritten by the government and thus constituting a major fiscal threat all on its own.

This is not even addressing ongoing issues of inadequate power provision, which costs around $200 million a day, further damaging the economy.

The great majority of municipalities in debt are or were until recently run by the ANC, and collectively have debts of $42.7 million, some broke and having been taken over at the provincial level.

Many ANC-run municipalities are not getting unqualified audits years in a row, while irregular and wasteful expenditure – some theft of funds, some merely ill-spent money with little value accruing – in all spheres of governance continues apace, as shown by the auditor-general's annual reports in recent years.

With dozens of corruption-accused people, including alleged private sector corruptors, recently and with increasing frequency appearing in the courts, there is a sense that “corruption is everywhere”.

Even the National Lotteries Commission, proceeds of which are to be used to help the poorest of the poor, has been ripped off by former executives to the tune of $16.7 million, says the auditor-general.

That something has gone badly wrong in the running of SA, especially in the handling of public money during the Zuma era, is self-evident on these and many other supporting facts.

Some argue that not all that has happened is Zuma’s fault and that there is more at play than one man, no matter what he personally may have to answer for.

Zuma ascended to the South African presidency on May 9, 2009, on a wave of euphoria fuelled by the belief that he would “deliver” on the post-apartheid promise of more opportunities for the formerly oppressed masses.

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Zuma’s election campaign was built mostly on Zulu nationalism and his personal charisma.

He projected this identity and character through an ostensibly leftist ideological lens, while entertaining supporters with his song-and-dance routines when making public addresses – further entrenching the image of a ‘man of the people’.

Famed for his singing of his favourite anti-apartheid struggle song, "Umshini wami", also known in the isiZulu and IsiXhosa languages as "Awuleth' Umshini Wami" (English for bring me my machinegun), Zuma actively promoted the ‘national democratic revolution’, as favoured by the far left in the ANC and its alliance partners, the South African Communist Party (SACP) and the Congress of South African Trade Unions (Cosatu).

This ‘next phase’ of the liberation movement was aimed at the “economic emancipation” of the masses who had been actively deprived under apartheid and before that colonialism.

As a notion, it was widely popular and engendered near-adulation of Zuma among those who had felt betrayed by the Mandela presidency of the mid- to late-1990s, and by a decade of seeming ‘disengagement’ by his successor, Thabo Mbeki, from the daily struggles of ordinary South Africans – as infamously embodied in Mbeki’s much-derided Aids denialism.

Viewed as a ‘man of the people’, and a ‘good Zulu boy’, Zuma’s prior legal travails enhanced, rather than undermined, his image in the eyes of a section of mainly Zulus and some others who saw in him their own hope for the future.

As a ‘man of the people’, Zuma’s effectively loosening of the purse strings of state was seen in some influential quarters as the much-longed-for “levelling of the playing fields” of the economy.

But this populist assault on economic inequalities, which are a large component of SA’s legacy of colonial and racist oppression, and with the society among the most unequal in the world, was to prove more rhetorical than real.

As a cover for what was to be mass thievery of public money, the notion of ‘radical economic transformation’ was paraded as the ostensible end of alleged ‘white minority capital’.

Both terms are misnomers, dreamt up by now-defunct UK-based PR firm Bell-Pottinger, specialists in advising governments on ‘political dirty tricks’, as some have described that outfit’s dubious conduct.

Both terms were used in tandem to operate as a cover for what Zuma and others in the ANC were actually up to.

For one thing, most ‘white’ capital subsists in the value of urban homes owned by people given that tag, little of it residing in the value of land dispossessed from its original indigenous owners and due for restitution.

And ‘radical economic transformation’ – including calls to nationalise mines, the Reserve Bank, all other commercial banks, mines, major commercial enterprises and, from some, even of all the land itself – translates in practice as a smokescreen for theft of public funds.

Even while rural and urban land-hunger grew, it was claimed that officials were working for the poor masses, a pretence under a false flag.

Among other moments when the estimable Chief Justice Raymond Zondo, during his four-year probe into systemic state capture graft, was in open shock, shaking his head without words, was when he realised that ANC ‘deployees’ and appointees to key government and state-owned enterprise positions had betrayed the poor for their own profit, severely damaging the economy as they enriched themselves.

A number of these people have since been charged with corruption and related crimes, and others are likely to be dragged to court on similar charges.

But the outright and blatant thievery involved, wherein the victims were the most vulnerable in society, was breathtaking in its audacity and cynical self-interest.

A case in point is the ‘asbestos in indigent houses’ replacement tender-that-never-was, in which former Free State provincial ANC premier Ace Magashule is charged, along with several others, with fraud and corruption, as no such work was done.

This and other instances bespoke the absence or collapse of any sense of morality or responsibility by the people empowered to make decisions to help their fellow citizens, but who rather wielded that power for self-enrichment.

Despite both the terms ‘radical economic transformation’ and ‘white minority capital’ being manufactured and thoroughly discredited – both smokescreens for misconduct and meant to facilitate more of the same – there is still a radical economic transformation (RET) faction contesting the top spots and control of the ANC in its December elective conference.

Beyond that, Zuma has allowed one of his daughters to put out a midnight tweet recently in which she announced that Zuma “would make himself available” for election to the post of ANC national chairperson in the leadership race.

Besides Zuma receiving early release from imprisonment for contempt, after only a short time behind bars – on grounds of his “potential imminent demise”, according to the ally who allowed that release, since ruled irrational and illegal, with the former fighting a rear-guard action to keep himself out of prison for the remainder of his term – he is also fighting 783 counts of fraud, money-laundering and corruption charges, dating back more than 20 years.

This means he cannot possibly stand for election to any party position, since the ANC has determined, as part of its own ‘clean up’ process, to not allow formally charged persons to run for any of its offices or positions.

The announcement of Zuma’s “availability” is obviously more posturing than real, but still is part of the mythology of Zuma as a put-upon victim of ‘machinations in the dark’ by forces arrayed against him, precisely because he has cast himself in the ‘man of the people’ role.

According to Zuma, during his uninterrupted and rambling opening statement to Justice Zondo, there were already “plots” against him as far back as the early 1990s, by, among others, the then apartheid-serving National Intelligence Agency of South Africa, the US Central Intelligence Agency (CIA) and British MI6.

All the allegations of state capture levelled against him were the result of such plotting, claimed Zuma.

That testimony, unbelievable to Zondo as it was, was offered in the only time Zuma took the stand before Zondo.

Subsequently, the former president refused to be subjected to cross-questioning on his highly improbable account, or any other aspects of state capture, and ultimately was jailed in July last year for refusing the Constitutional Court’s order that he must again appear before Zondo.

His story was patently ludicrous as, on return from exile as an anti-apartheid combatant, Zuma was not unknown but was hardly someone the CIA and MI6 could somehow have known would lead the country and therefore be plotting his downfall.

Justice Zondo did not fall for that line, finding Zuma central to state capture, with the ANC itself equally accused of complicity.

There are other metrics by which to measure the ANC’s performance in governance, such as SA persistently being in the ‘top 10’ globally for murders, rapes and violent robberies, even eclipsing countries involved in outright conflicts.

But on the hard numbers themselves, with little space for ideological interpretation, it is clear that the cost to SA and its citizens of the second half of the ANC’s 28 years in power has been severe.

And the cost continues to rise, even as the party, as one analyst put it, “plays political musical chairs”, against a background of intensifying demands for leaders who will work for the people, and not for their own and their family’s personal wealth.