How Zondo Report findings are affecting SA business sentiment

The outcome has ‘provided some sort of comfort that people who are being corrupt, who have been corrupted, are not going completely unnoticed’: Econometrix chief economist Azar Jammine.

FIFI PETERS: Now that we have all three instalments of the Zondo State Capture Report detailing the extent of the graft within government corridors, what does business think about the information shared, and how will this impact business sentiment for future investment into the country?

We’ve got Dr Azar Jammine, the chief economist at Econometrix to give us an indication. Dr Jammine, it’s really good to catch up with you again. I’m wondering at a very broad level, just based on your dealings with some of the clients so far, and just given what has come out from the State of Capture reports, what do you think that businesses take on it is, now that we have all three? And what do you think is likely to happen to future investment decisions?

AZAR JAMMINE: There can be no doubt that the institution of the Zondo Commission has at least shown some commitment on the part of the government to try and root out corruption. I think it was music to many businessmen’s ears to hear that some people have been found out – and there’s concrete evidence now emerging of that. That has provided some sort of comfort that people who are being corrupt, who have been corrupted, are not going completely unnoticed.

However, there is extreme frustration at the [time] being taken to bring perpetrators of corruption to book. There is frustration that not many people who have been accused of corruption and found out to be corrupt have actually had to pay much penalty for that. I think that is the source of frustration at the moment.

So if you ask me is it doing any good to business confidence, I would say it’s certainly not been a negative to have this; it’s been more positive than negative because it has shown some movement in the right direction. But the criticism is that it hasn’t yet gone anywhere near far enough.

And then when you keep getting the pushback from those who have been found to be corrupt, this is a further source of disillusionment with how much this really means.

FIFI PETERS: Exactly. Just given that, that pushback will probably be at the expense of the taxpayer – taking some of the outcomes in the report on judicial review.

But I want to speak to you more about that frustration, because some analysts that I’ve spoken to have said that until you have people who have been implicated in orange overalls, it’s not really going to move the dial in terms of the perception of a lot of businesspeople about investing in this economy and trusting that those investments will be used and will be safe in this country.

Do you take such an extreme view?

AZAR JAMMINE: Without a doubt the sentiment that you have just expressed, Fifi, is precisely what I hear time and again from my clients who are mainly businessmen –  that until such time as they see concrete action a lot of this is hot air.

At the same time, it just does alert. I suppose it provides a little bit of solace that we are doing something about it, rather than completely turning a blind eye towards it. From an investment point of view, there is also a very cynical perception that in many jurisdictions – you also have other jurisdictions outside of South Africa – you have corruption and yet investment still proceeds, in other words that corruption is not the only impediment to investment.

My retort to that is the problem with us is the kind of corruption that we have had. The former state capture has really and truly just sucked up so many resources of government that would’ve been available for social development and upliftment of society more generally. I think in other jurisdictions corruption may not have the detrimental effects that it has had in South Africa, where our economic growth rate has deliberately declined because of the diversion of so much money to unworthy sources.

FIFI PETERS: Yeah, I agree with you completely. The opportunity cost has been very significant. Also looking at the record unemployment numbers that we unfortunately boast as a country, they are a testament of that.

Dr Jammine, let’s leave it there for now. Dr Azar Jammine is the a chief economist at Econometrix.

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