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The huge task of ‘recapturing the state’

It’s about much more than rooting out corruption.

Just 12 months ago, headlines were emerging that then finance minister Pravin Gordhan faced imminent arrest. Cyril Ramaphosa had hardly begun any kind of campaign for the ANC presidency and it seemed inevitable that Nkosazana Dlamini-Zuma would ascend to that position.

“It also looked like Jacob Zuma was immune to any sanction at all,” said political analyst Daniel Silke, speaking at the University of Cape Town’s Graduate School of Business this week. “The Guptas were virtually running the show.”

Considering how different things look now, Silke said, one has to acknowledge that there has been “substantial change” in South Africa. 

“We’ve done remarkably well to begin to confront some of the very big demons we faced,” Silke said. “Just the reintroduction of charges against former president Jacob Zuma and the suspension of Tom Moyane at Sars are quite remarkable.”

Read: Ramaphosa suspends Sars head Moyane

Independent consultant and analyst, Raenette Taljaard, who served as a DA member of parliament between 1999 and 2005 agreed that the reinstatement of charges relating to the arms deal against Zuma are an indication of how the environment has shifted under President Cyril Ramaphosa.

“When I served on the Standing Committee on Public Accounts (Scopa), a lot of us laboured for probably two years on the arms deal never to see a real outcome,” said Taljaard. “Questions in parliament to the former president are 16 years in the past. It’s early days in a mammoth task, but we do see a very clear effort at a clean up operation.”

Lost years

Professor Haroon Bhorat from the School of Economics at the University of Cape Town agreed that “recapturing the state” is a huge undertaking. He pointed out that it was as long ago as 2010 that Barbara Hogan was fired as Minister of Public Enterprises, which could be seen as one of the first significant moments in state capture.

“Appreciating the period that we have lived under state capture and the raiding of state coffers is really important,” said Bhorat. “If it went on for eight years, that must mean that it’s not going to be a quick fix.”

He added that the damage to the country over this period was far greater than just the sum of money lost to corruption.

“Those were eight lost years in terms of building a more constructive, nuanced economic policy framework for the country,” Bhorat said. “Now we can think a bit more about economic policy, about how do to development more creatively.”

Read: We survived the budget, now for the really big questions

This is critical to guard against something similar to the Zuma era reoccurring.

“It can manifest itself again if we continue with the nature and structure of growth we have had,” said Bhorat. “That is capital-intensive growth that does not absorb labour, with rising inequality levels, and modest changes in poverty.

“It’s a classic middle income country growth trap,” Bhorat added. “If you combine that with a toxic political environment, that is what allows for what we’ve seen in terms of state capture, as the growth benefits are not there for society that is essentially fragmented along racial lines. What the current Ramaphosa regime offers is a window of opportunity to do growth differently.”

First steps

This is, however, far from a simple task. Ramaphosa has to bring competing interests together to find common ground, even within his own party.

“He has to show distinct change to keep the business community and ratings agencies on board,” said Silke. “But how does he balance that to retain unity within the ANC and to appease populist sentiment?”

The president has at least begun with a focus on reforming state-owned enterprises (SOEs) that over the past few years appear to have been primary targets of looting and have come to represent serious risk to the fiscus.

Read: SA to reform state firms after graft scandals – minister

“It’s almost true to say that, outside of Eskom, you can fire everyone on all SOE boards and you won’t lose anything,” said Bhorat. “And once you reengineer the boards you are on your way because the boards can then appoint new CEOs and CFOs and so on.”

Taljaard agreed.

“A huge amount of work is needed on the balance sheets of SOEs and finding structures that are workable and sustainable,” she said. “For instance, Eskom should have been split a long time ago. These issues are now front and centre not only for the reformers but also the ratings agencies.”

Another big issue is the public sector wage bill, which has become nearly 35% of government’s budget.

Read: SA’s whale-sized public sector wage bill approaches a cliff

“In the Jacob Zuma years we saw a ballooning of the public sector wage bill,” said Silke. “Ratings agencies will want to see action on government expenditure, and at least freezing or curtailing of some of the excess in the public service.”

Silke added that while the damage that has been done is severe, there is reason to believe it can be remedied.

“I actually believe that the social compact theory that Ramaphosa puts forward is the critical issue for us all,” he said “The question is can he get everybody on board. I think if there is anybody who can get business, labour, the state, civil society and special interest groups together as a collective it’s probably him. That’s where my hope is – in getting a collective solution.”

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Great that you have started the conversation Patrick. I don’t think any of us understand even remotely the extent of the changes that have to be made, but as sure as nuts we will have consultants rubbing their hands in gleeful anticipation at the prospect of the massive killings they can now make in “turning around” state institutions that have lost their souls.

Guess who will be among the first in the queue? McKinsey, and the big 4 auditing firms who have “experts” in their midst.

The need for quality investigative journalists remains a real priority.

Turning a rotten fish to fresh?

A miracle is required

Indeed. Entropy cannot be reversed.

allow me to add a qualification: Entropy cannot be reversed without the input of (considerable amounts of) energy. However adding energy to any equation is not a strength in SA.

Why did they watch “state capture” and say nothing at all?

Now that it’s broken we all have to rally around and fix it???

Lucky we are sticking around to help instead of listening to the little hitler and running away.

Because the ANC cares more about its ‘processes’ than it does the country’s welfare. They couldn’t oust Zuma until they held their precious elective conference, despite masses of evidence of wrong-doing. Of course the more cynical among us would say that they were all in on it, so why would they want to bring the whole thing to a crashing halt while the cow was still worth milking? The way they did it, they could have their cake and eat it too.

absolutely right. ANC is pigheaded and still doesn’t want to listen to obvious advice!

ANC’s purpose is only to support itself, nothing more than that, nothing beyond that scope.

Now just as The Donald is doing. First get rid of worthless, feckless ministers. Then, create a team and watch closely their progress; Then, fire more and replace. It’s not a quick fix that can occur BUT it is a fix in the long run and Zuma (like Obama) has placed his minions in virtually every facet of government. Here’s an idea
OFFER A REWARD (% OF THE RECOVERY) TO WHISTLEBLOWERS WHO UNEARTH CORRUPTION!!!!!!

This has been done already. But this does not stop serious and severe persecution of whistle blowers, regardless of legislation.

“Recapturing” means little, if anything at all. It’s still the ANC, take note. There’s still all amounts of queuing up for snouting at the trough of the taxpayer’s coffers.

It is not just ‘recapturing the state’ but also…
– undoing ANC corruption through all organs of state and SOE’s;
– recuperating the stolen money;
– catching up on the work that should have been done but wasn’t for the last 24 years;
– getting rid of dead wood (mostly ANC dead wood).

Agreed.
While large scale looting is done at the top levels the same would apply throughout the procurement chain.
Examples.
Equipment tendered at R1,5 million is inflated by R250k (15% rounded up) (Brown paperbag Etc)
Low values x qty (Inflated) and prices (Inflated by many times).
Every fraud imaginal is being committed in a failed segration of duties enviroment.

Shame im crying for the ANC ! – “ African national culture of non-payment”
Add to this +-R128 000 000 000 (2017 estimate) owed to municipalities climbing exponentially into the future and with only 7% of them currently functional.
Some clever guys from the government stopped registering title deeds back in 2004 to +6million households which further exacerbates the payment of bills! This will take 20 years to fix and R12 billion in legal and surveyors fees to fix.
Furthermore, the SOE’s will stay bankrupt even if you replace them with new faces as only one in six South Africans are paying their bills.
Changing a society that’s generally incompetent, corrupt and inept is impossible!

Sorry, but I omitted the culture of non-payment for services (and stolen services) which is the biggest hole of all – even more than the corruption.

CR say it is perfectly legal for the state to pay Zumas legal cost ( R13.5mil )in one of his many court cases…..how on earth do they want to recapture anything?

“Recapturing” by for instance even allowing the arrogant Escom to ask for a 30% increase today..ha ha! good luck. I don’t think the black ANC government realize the amount of destruction their leaders caused and still going strong on the destruction.

The first noise after CR appointed is pandering to the effing EFF about EWC. The best start is to get rid of the noise, keep up the Ramaphoria by throwing JZ to the wolves with the dead wood to follow.

State capture is basic ANC policy. They confirmed state capture as policy at the Polokwane conference. State capture is part of the DNA of the ANC. Full political control over all SOE’s and municipalities, and the appointment of ANC lackeys on the boards of these institutions were the results of the Polokwane conference. The centralization of the decision-making process, the consolidation of the power of the politburo (Luthuli House) is ANC policy.

This whole process enables the looting of SOE’s and municipalities. It is a sure recipe for the destruction of the economy. How can any sane person now expect this same organization the turn this process around? Only a resolution at a national congress can end state capture. For this to happen the ANC will have to adopt the economic policies of the DA, FF+, UDM and IFP who stands for the protection of property rights and a market economy. The ANC is moving in the opposite direction by teaming up with the EFF. The ANC is moving deeper into socialism, then communism and eventually fascism.

Those who believe that the ANC can turn this sinking ship away from the rocks is simply delusional.

…what you say reminds me of RW Johnson’s statement in his 2015 book:

“…it is now clear that South Africa can either choose to have an ANC government or it can have a modern industrial economy. It cannot have both.”

I’ve always been of the opinion that the EFF is just a branch of the ANC….nothing is going to really change. There are too many people that promises have been made to and the ANC/EFF have to deliver…..whilst the minority groups have to pay the price.

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