When I sat in a credit committee meeting for the approval of Shiva Uranium and other Gupta-related deals at the Industrial Development Corporation (IDC), little did I know I was being complicit in a process that would eventually result in state capture.
The repurposing of the South African constitutional state and hollowing out of its institutions has been documented by the public protector, media organisations and academics.
However, the operational implications of this phenomenon remain elusive. Insiders need to come out of the closet if South Africans are to succeed in reclaiming their constitutional state and its institutions, as we recently learnt from a joint workshop with the World Bank.
Because of my experiences at the IDC and Transnet, my research has focused on the state and its institutions, but there is also an urgent need for research on the extent and depth of fraud and corruption in the private sector.
Company names such as Steinhoff, McKinsey, SAP, PwC, KPMG, Nkonki, Regiments and Trillian have become prominent. But little is known about their inner workings that resulted in corruption; simply ascribing it to greed and the animal spirit of capitalism is not sufficient.
Company names such as Steinhoff, McKinsey, SAP, PwC, KPMG, Nkonki, Regiments and Trillian have become prominent. But little is known about their inner workings that resulted in corruption; simply ascribing it to greed and the animal spirit of capitalism is not sufficient
Hiding behind barriers to transparency not only denies scholars insights into what is happening inside firms but starves us of innovative means to find new ways of operating the capitalist system.
A two-day workshop with the World Bank on state capture and corruption was recently initiated by the University of Cape Town’s Prof Haroon Bhorat, author of Betrayal of the Promise. A group representing business, unions, government, civil society organisations and academics engaged with a World Bank team led by Prof Shanta Devarajan.
We were curious as to what had driven World Bank interest in the South African experience and what lessons we could learn — although it did cross our minds that this may have been a prelude to a structural adjustment programme.
A team of researchers from the World Bank led by Syed Akhtar Mahmood and Meriem Ait Ali Slimane recently published Privilege-Resistant Policies in the Middle East and North Africa, Measurement and Operational Implications. The authors are interested in features of good governance that can be instilled in the design of economic policies and institutions to help shield them from capture.
Their publication has two objectives. First, to move the debate and rhetoric on privilege, capture and cronyism towards a more tractable and operational framework that focuses on concrete and specific policy design features that could limit opportunities for capture.
Second, it aims to focus on the systemic measurement of the dimensions of policy-making that could lead to discretionary and unfair behaviour, by applying the motto “what gets measured gets done” to private sector governance, and offering a menu of entry points for policy makers to start tackling the capture issue.
We learnt from the World Bank team that over the past decade the Middle East and North Africa (Mena) region has experienced modest, low productivity per capita GDP growth. Mena countries have not been able to absorb fast-growing labour forces into higher productivity activities. Unemployment and underemployment remain high, and most workers are employed in small-scale and low-productivity activities. These phenomena — low rates of firm turnover, productivity growth and job creation — are the result of the same policies that constrain competition in places such as SA.
SA must ensure that “Ramaphoria” and rhetoric on land and race do not entrench the privileges of an elite. Vigilance, participation and accountability are required in the new social contract, since new actors could see this phase as their time to eat.
• Mondi is a senior lecturer in the Wits School of Economic and Business Sciences.
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