South Africa

ISS Today: South Africa pays the price of state capture

By ISS Today 11 April 2017

Has President Jacob Zuma completely captured the state with his firing of Pravin Gordhan? By Judith February for ISS TODAY.

First published on ISS Today

When former deputy finance minister Mcebisi Jonas made the startling claim that President Jacob Zuma’s associates, the Guptas, had offered him the position of finance minister and R600-million, the term “state capture” suddenly found its way into South African conversation.

The Public Protector used the term in her 2016 State of Capture report into Jonas and others’ allegations regarding the influence of the Gupta family on the cabinet and tender processes. The report detailed instances of the Guptas’ interaction with then Eskom CEO Brian Molefe and others, like former ANC (African National Congress) member of Parliament Vytjie Mentor, who also blew the whistle on the Guptas.

Political turbulence has been growing since Zuma “went rogue” and fired the well-respected finance minister Pravin Gordhan as part of a cabinet reshuffle on 30 March. Zuma has provided conflicting and vague reasons for his decision and did not consult the ANC about it.

Since then the new Finance Minister Malusi Gigaba, has stressed that the country will continue the course of “inclusive growth” and that the economic trajectory will not change. Presumably this was done in the vain attempt to reassure Moody’s and Fitch after S&P Global downgraded South Africa to “junk status” on 3 April. (Fitch promptly followed suit on 7 April.) There has been little to no talk of the “radical economic transformation” that Zuma’s acolytes said Gordhan was standing in the way of.

The only reason remaining, therefore is that Zuma wanted full access to the National Treasury without Gordhan, the fiscal gatekeeper. His departure opens the door to the nuclear deal being signed with Russia, and also more careless decisions regarding the Public Investment Corporation, and greater control over state-owned enterprises and tenders. This is state capture writ large.

Daniel Kaufmann and Joel Hellman, writing for the International Monetary Fund, describe state capture as “the efforts of firms to shape the laws, policies and regulations of the state to their own advantage by providing illicit private gains to public officials”.

They go on to say that: “Because such firms use their influence to block any policy reforms that might eliminate these advantages, state capture has become not merely a symptom but also a fundamental cause of poor governance. In this view, the captured economy is trapped in a vicious circle in which the policy and institutional reforms necessary to improve governance are undermined by collusion between powerful firms and state officials who reap substantial private gains from the continuation of weak governance.”

Anne Lugon-Moulin says: “State capture can be further refined by distinguishing between types of institutions subject to capture (Legislative, Executive, Judiciary, regulatory agencies, public works ministries) and the types of actors actively seeking to capture (large private firms, political leaders, high ranking officials, interest groups).”

It all sounds familiar. We have had a front-row seat to the poor governance state capture has caused.

In South Africa, the courts remain a bulwark against the complete capture of the state. Last year the Constitutional Court delivered a damning judgment on Zuma’s excessive expenditure on his Nkandla homestead and he was compelled in some way to “pay back the money”.

However in the past week the President has shown himself to be unaccountable for his decisions and the exercise of his public power. Apart from Zuma himself, those closest to Zuma similarly show complete disregard for the public and the courts. Minister of Social Development Bathabile Dlamini missed a Constitutional Court deadline in which she was required to explain why she shouldn’t be personally liable for the costs of the Sassa matter in which the payment of social grants was mired in delay and corruption.

This disregard for the highest court in the land could have far-reaching consequences for the trust placed in the judiciary and also the rule of law in South Africa. One could quite easily imagine a scenario in which a rogue Zuma acts completely outside the bounds of the constitution.

Given the seismic events of the past two weeks, focus has shifted to another democratic institution – Parliament. Can the ever-ambitious and conflicted Speaker Baleka Mbete deliver on her promise that “Parliament will rise to the occasion” to deal with the issue of Gordhan’s axing, and in so doing, with state capture? Or is Parliament itself captured?

Having “consulted” regarding a motion of no confidence in Zuma called for by the opposition in terms of section 102 of the Constitution, the date is set for 18 April. Only a majority is needed to oust Zuma. But will the ANC MPs vote with their conscience or follow a “three-line whip” to vote for Zuma? Already ANC secretary-general Gwede Mantashe has said that no MP will vote alongside the opposition. Zuma’s calculation will doubtless be correct; that MPs will support him when their backs are against the wall. Time will tell whether they are able to show that they place country before party.

If the motion of no confidence fails and the ANC doesn’t act on Zuma’s recklessness, then the mobilisation of citizens will need to continue to bring about a more accountable and transparent state which is responsive to its people.

Many have called for Zuma to go; marches have been held and more are planned. One march will not cause Zuma to leave office, however. Hundreds of thousands of people need to commit to sustained action and strategic organisation for there to be any impact on Zuma, or indeed the stalemate within the ANC. In South Korea, almost a million people protested against former president Park Geun-hye before she was removed from office. They did so consistently in various public spaces around Seoul.

For some time, Zuma has acted in ways that were unacceptable and often corrupt. He has paid lip service to the Constitution – yet in form, if not in substance, he begrudgingly submitted to its authority. On 30 March, that changed. Zuma showed us that he would exercise his constitutional prerogative to hire and fire ministers without reason or rationality. We are now in uncharted waters. DM

Judith February is an ISS consultant.

Photo: South African Finance Minister Pravin Gordhan (R) greets president Jacob Zuma (L) ahead of presenting his Medium Term Budget Policy speech to Parliament in Cape Town, South Africa, 26 October 2016 (reissued 31 March 2017). EPA/NIC BOTHMA


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