The Twitterati have described political events unfolding in South Africa as akin to a long Nigerian movie with a bad ending. Many citizens, meanwhile, fear that the country is in terminal decline and that they are slowly but surely following the same path to widespread poverty and hardship as their northern neighbours in Zimbabwe. Recent data on the wealth gap in South Africa suggests that citizens, including the salaried middle classes, are struggling financially and that more are slipping into poverty.
South Africa at a cross roads.
South Africa is sailing through tempestuous seas. It has no captain and is manned by a dysfunctional crew. Depending on the outcome of this rudderless journey, the country’s future could include being commandeered by crony capitalists and a credit rating downgrade to sub-investment grade.
This in turn would tip it into a recession. It would also entrench policy dysfunction, heighten socio-political and macroeconomic strife and undermine democratic fundamentals.
Alternatively, the country could resist state capture and weak governance; democracy could deepen, and centralised corruption could weaken.
There’s a fierce battle underway between two opposing camps. The outcome will determine whether the country is finally captured by crony capitalists, and shape its democratic trajectory. The one camp is represented by the patronage politics of President Jacob Zuma and the Gupta network. The other includes the National Treasury, African National Congress stalwarts, the media, nongovernmental organisations and business leaders.
The issue is corruption, like most (but not all) of black Africa:
South Africa’s future prosperity, stability and cohesion is at stake. Corruption not only affects economic performance, including foreign direct investment. It also undermines a society’s democratic fundamentals.
There are two opposing arguments when considering corruption and foreign investment. One is that corruption acts as a “helping hand” for investment. This is because paying bribes may speed up bureaucratic processes and facilitate access to publicly funded projects.
The other view is that corruption acts as a “grabbing hand”. This is because bribes are an indirect tax that reduce investment profits, waste resources and heighten contract-related risks. …
[I]nvestors are increasingly, and openly, judging the costs associated with corruption scandals to be a “grabbing” rather than a “helping” hand.
hat-tip Stephen Neil