South Africa’s collective financial institutions, from banks and insurance companies to audit firms - and the organisations that regulate them - have been the shining beacon of good governance, debunking Africa’s poor reputation in this regard. Few in Africa had been able to improve commercial infrastructure in the transition to independence from colonial rule.
South Africa built up fiscal structures that were even better than the ones Western countries had left behind. But in December 2015 this reputation and the systems that upheld it were rocked to the core.
The president had already been stained as morally flexible for his court appearances for everything from fraud to rape and international trust waned. It was for the state institutions, the airtight Constitution, and the private sector to keep the politicians honest.
So when the finance minister with a proven track record and recognised tenure within Treasury was replaced by a virtual unknown, the markets reverberated.
If our development is based on the global community doing business with us - based on international confidence in our financial systems - then the weakening of those systems spells the weakening of our development. That leads (as in Nigeria and the DRC) to economic and political instability.
Gluttony and crass materialism have poisoned men. One possible cause of this breakdown in values once synonymous with the very identity of people of African descent is the concept of wealthism.
Wealthism is the belief that wealth is the primary determinant of superiority. This view is usually held by the poor and generally distorts perceptions of ethics and morals. Previous beliefs around life, family, community, and country are replaced by the pursuit of money; Ubuntu is a source of shame.
The crescendo of this degeneration was at the suspension of the notorious Gupta accounts at all four major banks, and the implication of KPMG and McKinsey in some of the family’s business operations that were supposedly defrauding the South African public.
The pillars of financial independence were implicated in a crime. On June 13 last year Moody’s rating agency downgraded local banks to a “negative outlook”. On November 24, Standard & Poors followed suit - South Africa was downgraded to junk status. And the final nail was the World Economic Forum’s Global Competitiveness Rankings fall from grace for South Africa fuelled by the decline of quality in auditing and reporting standards. We held the summit for years, but in 2017 our rank dropped 14 places to 61 out of 138 countries.
The IRBA said the decline is informed by economic indicators for rating agencies - the strength of securities exchange, efficacy of corporate boards, protection of minority shareholders’ interests, decline in strength of investor protection, and firms’ ethical behaviour. This collectively represents an economy’s vital signs, and in 2017 these indicators coupled with governmental economic policy uncertainty drove South Africa backwards.
This year hasn’t seen much of an improvement, with further slippage as the country discovers details around ministerial involvement in Gupta-linked business irregularities from the Zondo Commission. Now the daunting task of returning international confidence, but more importantly national moral decency to South Africans is imperative to drive growth both personal and commercial.
* Monyae is a senior political analyst at the University of Johannesburg.
** The views expressed here are not necessarily those of Independent Media.