South Africa’s cronies can’t even get corruption right

 ·26 Aug 2017

For cronyism to work effectively, a country’s economy needs to at least be growing – something South Africa is currently failing to achieve. This makes the country something of an outlier, says Jac Laubscher, economic adviser at Sanlam.

Citing a recent article published by Foreign Affairs, Laubscher said that it was not only developing or emerging economies that are characterised by cronyism, but also developed countries in the west.

He said this was especially the case if lobbying to influence policy and legislation, the funding of political parties by business, and the bail-out of firms that are in trouble are included in the characterisation.

“Corruption is not so much a problem for governments, as it is an approach to government – one chosen by far too many rulers today. Rather than a weakness or a disorder, it (corruption/cronyism) is the effective functioning of systems designed to enrich the powerful.”

Because of its greater ability to create wealth, albeit for the few, countries that are notorious for cronyism tend to favour some variant of a capitalist market economy.

“A prosperous, rapidly growing economy is, after all, necessary for cronyism not to run into a brick wall once the extraction of wealth from society reaches a tipping point,”Laubscher said. “The deceleration of economic growth will very quickly expose the underlying institutional and structural flaws of the economy.”

South Africa

However, while having a “successful” capitalist system is almost a requirement for a crony government, South Africa is different, Laubscher said.

“A peculiar South African anomaly is the combination of cronyism and low growth, with the latter not being prioritised for remedy.”

This puts the country at even greater risk, as at its core, cronyism is about making money, no matter who gets stepped on to achieve that end.

“If crony activity destroys developmental prospects and is antithetical to economic growth and social betterment in a country, that is of no concern (to cronies) whatsoever. Bettering a country’s prospects is not the objective. Making money is.”

“The public outcry against cronyism in South Africa, even if it succeeds in stopping the current rot, will therefore not be enough to resolve the issue once and for all.”

“Because of the unique expectations of the South African public for the government to transform the economy into a more equitable arrangement, it will require constant vigilance to prevent malfeasance in the system – the potential for which will always be present.”

Laubscher said that other international models on cronyism now also no longer apply to South Africa, and that a new, transformative leader is unlikely to have the same effect it would in other countries.

“Although regime change may be a requirement for dealing with corruption, it is not enough because of the resilience of corruption networks.”

“The contradiction between kleptocracy and democratic practice urgently needs to be resolved,” he said.

Read: CEO vs employee salaries at Eskom, SAA and other state companies

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