Corruption is a class project
Different factions of South Africa's ruling elite are implicated in looting and profiting from the state. South Africans should take an attitude of a plague on both their houses.
Image credit Government ZA on Flickr CC BY-ND 2.0.
The ongoing scandal surrounding South Africa’s former health minister, Zweli Mkhize, who was implicated by a special investigator in a COVID-19 corruption case, fired from office, yet thanked by President Cyril Ramaphosa for serving the nation well, is symptomatic of a terrible disease gripping South Africa. Literally, billions of rands are looted, not just by the predatory elite (a small collection of wannabe capitalists), but also by the “civilized” elites in Sandton (the financial heart of Johannesburg, where the country’s white-dominated private sector is headquartered). Their combined efforts are laying waste to the country’s economy.
COVID-19 has laid bare the depth of social, economic and political crises facing South Africa. No country or state can sustain a society where almost 50% of the workforce is unemployed. Nor is it possible to talk of a united single nation where just 10% of the super-rich own 90% of the wealth. And no society can develop where a woman is raped, on average, every 25 seconds.
Billions of rands is lost to looting, price gouging and profit shifting. This is money that the state should be investing in social renewal, creating decent work and reindustrializing the economy for a low carbon future. For example,
- Global Financial Integrity estimated South Africa lost around US$26 billion. through trade misinvoicing, transfer pricing, profit shifting and other forms of illicit financial outflows;
- According to Kenneth Brown (South Africa’s former chief procurement officer), in his 2016 report, 40% of the government’s budget for goods and services was being consumed by inflated prices from suppliers, and fraud.
- Davis Tax Commission conservatively estimated that South Africa loses at least R50 billion to corporate profit shifting annually;
- Former finance minister Pravin Gordhan estimated that “state capture” between 2014 -2017 cost R250 billion.
Corruption and cronyism dominate the discussion of South Africa’s current political situation. They are the symptoms of the crisis, at the core of the project to create a black capitalist class without redistributing wealth in the form of assets as capital.
