For years former president Jacob Zuma and his trusted lieutenant Ace Magashule foolishly believed corruption and development could co-exist., writes Kabelo Khumalo.
JOHANNESBURG - For years former president Jacob Zuma and his trusted lieutenant Ace Magashule foolishly believed corruption and development could co-exist.

Their belief in this toxic mix even earned them a place as architects of a new economics theory - Stupid Economics.

But what they failed to grapple with in their adventure was that corrupted economies are just not able to function properly, because corruption prevents the natural laws of the economy from functioning freely.

This is why the National Development Plan (NDP) was a poisoned chalice from the onset. The plan stood no chance of achieving its objective as it existed side by side with corruption on an industrial scale.

Zuma appointed the National Planning Commission in May 2010 to draft a long-term vision for South Africa. But as recent revelations have revealed, the state capture project took over before even the ink dried on the country’s fledgling 2030 blueprint.

Numerous public representatives took turns to visit the (in)famous Saxonwold compound to fine-tune the art of looting a state over a bowl of curry. In fact, media reports show that Magashule had as early as 2006 begun a state capture prototype in the Free State.

The Planning Commission’s Diagnostic Report, released in June 2011, correctly listed corruption and high unemployment as one of the nine primary challenges facing South Africa’s economy.

To dent unemployment, South Africa needs sustained higher levels of growth. To this end, the commission set out lofty, but reasonable targets.

It aimed to reduce unemployment from 24.9percent at the time (2011) to 14percent by 2020 and to 6percent by 2030. The unemployment rate at the moment stands at 27.2percent.

The NDP document said to reduce inequality and poverty the economy needed to average annual gross domestic product (GDP) growth of 5.4percent over the period.

Yet this week, the International Monetary Fund said South Africa’s economy would grow by a modest 1.2 percent, while S&P Global Ratings puts growth at 1.6 percent, and the World Bank at 1.3percent.

Our own National Treasury in the February budget projects our growth to be around 1.5percent, while the SA Reserve Bank puts it at 1.3percent this year.

In all consequential indicators - the NDP has flattered to deceive. This is the untold legacy of state capture and the destruction of South Africa’s institutions. South Africans have paid a high price for the plunder of public resources.

Corruption by its very nature erodes the institutional capacity of governments to deliver quality public service and diverts investment away from major public needs into capital projects where bribes are the order of the day, thus increasing budgetary pressures on the government.

A classic example is the billions of rands that were diverted from the maintenance budget at Eskom, which lined up pockets of uncanny politicians and their Twitter rock star lackeys.

Research conducted by the Bureau for Economic Research (BER) has shown that the country missed out on a golden opportunity to reduce unemployment under Zuma’s presidency, with most of the economic stagnation self-inflicted.

The BER looked back at the performance of the South Africa economy between 2010 and 2017. It found that since the 2009 financial crisis, domestic real GDP growth has underperformed relative to both emerging market peers and average global growth.

The research said the underperformance hurt job prospects and tax collection. It showed that, under different assumptions regarding post-crisis growth and the elasticity of employment, the economy could have created between 500000 and 2.5million more job opportunities over the eight-year period.

Zuma stubbornly left office adamant that the country’s economic woes under his governance could be traced to the 2008/09 global financial meltdown. In his world, the economy could thrive to impressive heights in the presence of rampant corruption at all levels of the state and with a broken revenue collection system.

But the World Bank shows that the average income in countries with a high level of corruption is about a third of that of countries with a low level of corruption.

Magashule’s own experiment in Free State also proved to be disastrous to NDP’s efforts to create a capable state. He left office with the Free State one of the badly run provinces in the country.

In his 2017/18 general report, auditor-general Kimi Makwetu had unsavoury words to say about how the province was governed under Magashule.

Makwetu said instead of addressing the root cause of poor audit outcomes, the province opted to circumvent key internal controls.

Rating agencies have been backing the notion that a decisive ANC victory in next month’s elections would give President Cyril Ramaphosa a strong hand to implement structural reforms and continue the hollowing out of rogue elements in the state and state-owned institutions.

But the rating agencies might be underestimating the fightback from the beneficiaries of state-capture, who not only betrayed South Africa, but in many instances drew their own children into the web of deceit.

Cleansing the ANC will be a tedious process - and I am not holding my breath.

Ramaphosa should rather dedicate his energy and time in composing a post-election cabinet of men and women whose only desire is to serve and lift the economy from its doldrums.

He should unashamedly cash in the goodwill and political capital he has received since his elevation to the Union Buildings to usher in a new era of clean governance.

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