On the Brink. Claire Bisseker
than failing to prevent a shortage of electricity.
Seen through the prism of economics, state capture has the same corrosive influence as regulatory capture, in which powerful corporate interests compromise industry regulators. But if it happens frequently, in many places across the world, is it really such a big deal when it happens in South Africa?
A World Bank study on state capture, ‘Anticorruption in Transition’, points out that in countries with high levels of administrative corruption and state capture, gross domestic investment is over 20% less on average than in countries where this incidence is lower.48 Although this highlights a correlation, rather than causation, the figures are still compelling.
Predictably, for those companies that are able to ‘buy’ officials and game the system to their advantage, state capture is highly lucrative. Wider competition is undermined, while markets are restricted to those powerful individuals that have convinced policymakers to draft rules that entrench their advantage. In countries with high incidence of state capture, firms engaging in capture grew by more than 30% over three years, compared to a growth rate of only 8% among other firms, according to the same World Bank study. But for the wider public, it’s a disaster.
‘Corruption is empirically associated with lower economic growth rates, weakening the main factor that can pull people out of poverty,’ the study found. And, crucially for South Africa, one of the most unequal countries in the world, it also found that ‘income inequality has expanded most in countries with high levels of corruption and capture’.
In this context, it is doubly tragic that in order to muddy the waters, Zuma and his allies sought to reframe criticism of state capture as something invented by ‘white monopoly capital’ to prevent the economy from being transformed. In this world view, ‘radical economic transformation’ was the solution to achieving greater equality. Politically, it’s a populist message that plays well, even if the facts are a little more complicated.49
But, increasingly, society has begun to see through Zuma’s tactic of reframing his own personal travails as part of a wider social problem. In May 2017, 54% of ANC supporters agreed that Zuma should resign, according to a poll of 3 598 South Africans.50 The country is cottoning on to the fact that Zuma’s ambition isn’t to transform the economy to benefit wider society; it is all about enriching his own network.
Many in Zuma’s party who were once loyal to him are now fed up. Pityana, a former official in Mandela’s administration and an ANC member, is one such person. He now leads the Save South Africa campaign.
In his response to Zuma’s state-of-the-nation address in February 2017, Pityana urged the country to examine the real reasons why the Zuma administration had been such a complete failure. ‘We need to understand why there is no money to improve schooling and higher education. We need to understand why there is no money to provide better health care, and pay decent salaries to the people who teach our children, protect our neighbourhoods, and care for us when we are sick,’ he said. ‘The answer is often, albeit not always, a simple one: corruption.’51
But it wasn’t just the economic impact of corruption that was of such concern. Pityana warned also about the unseen rupture it was causing in the fabric of South African society. ‘State capture is the biggest source of mistrust between government and the people,’ he argued. And, like many, he had reached the conclusion that trust could be restored only ‘by opening the closet of secrecy’.52
In June 2017 that closet of secrecy was sprung open when the Gupta email cache hit the press. Though Zuma remains seemingly impervious to the revelations emerging daily, the careers of Molefe and Ngubane are over. It may not be long before the whole house of cards comes tumbling down. Repairing the trust between society and the state, and fixing the damage to the economy, could, however, take decades.
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