Broad based intellectual empowerment
24 July 2017 18:47 (South Africa)
Opinionista Ivo Vegter

Corruption may be less serious than we think

  • Ivo Vegter
    IvoVegterBW
    Ivo Vegter

    Ivo Vegter is a columnist and the author of Extreme Environment, a book on environmental exaggeration and how it harms emerging economies. He writes on this and many other matters, from the perspective of individual liberty and free markets. He is seldom wrong.

A recent corruption index compiled by an international private risk consultancy ranks South Africa among the least challenging countries to invest in. This contradicts a great deal of “perception” and “common knowledge” about corruption. Is it possible that we’re less corrupt than we think?

Our streets are alive with protests against corruption, demanding that Zuma must go and the “Zuptas” must fall. Pieter-Louis Myburgh has just published a book cataloguing how the Gupta family captured the state over the last two decades. 

The Gupta scandal follows a long succession of high-profile stories alleging or proving corruption at the highest levels of government and big business. These include bribery scandals related to the Arms Deal of 1999, convicted fraudster Schabir Sheik’s “generally corrupt relationship” with president Jacob Zuma, former police commissioner Jackie Selebi’s conviction for accepting bribes from alleged crime boss Glenn Agliotti, Brett Kebble’s missing millions, the Travelgate scandal in which 40 Members of Parliament were implicated in illegally using government travel vouchers for personal use, and the shameless misspending of public money on renovations to the president’s private mansion at Nkandla.

Add to this that government and state-owned enterprises account for a large share of the country’s economy, giving rise to “tenderpreneurialism”, nepotism and blatant cronyism, and you’d be forgiven for concluding that corruption is one of South Africa’s biggest problems.

According to Afrobarometer and Transparency International’s Global Corruption Barometer Africa Survey 2015, 83% of South Africans say corruption has got worse recently, and 79% believe the government is doing badly in fighting corruption.

The Institute for Economics and Peace, in its Positive Peace 2016 report, gives South Africa a moderate score on corruption, ranking it 55th out of 162 surveyed countries. The Transparency International Corruption Perceptions Index 2016 also placed South Africa around the one-third mark worldwide, ranking it 64th out of 176 countries. Its score of 45 out of 100 is slightly better than the global average of 43.

But contrary to popular opinion, the Corruption Perceptions Index shows that South Africa’s corruption score actually improved slightly over the last five years. The Global Corruption Barometer reports that only 7% of South Africans actually claim to have paid a bribe for public services in the last 12 months, which is far less than the regional average of 22%. The low rate of bribery was consistent across education, healthcare, home affairs documents, utilities, police services and the courts.

More startling than that, the Risk Advisory Group, a global consultancy, recently released a Corruption Challenges Index in which South Africa’s corruption problems are described as “unchallenging”. This puts us in the same ballpark as Australia and Chile, ahead of Brazil, India and Russia, and miles ahead of China.

The assessment is based on a survey of due diligence experts from the company’s business intelligence teams, conducted in the last quarter of 2016.

A “Corruption Challenge” score is determined based on a combination of corruption risk and information opacity.

Risk is a function of corruption threat (low to moderate) and investor exposure (low). The latter is affected by South Africa’s relatively small economy by comparison with other BRICS countries.

Opacity (the opposite of transparency) measures the availability of information to support effective evaluation of integrity risk. This includes factors such as public information availability and quality, and press freedom. The Risk Advisory Group ranks South Africa among the world’s most transparent countries, which contributes greatly to its low corruption score.

These findings suggest that despite a number of high-profile cases over the years, South Africa’s real corruption problem may be lower than perception surveys would have you believe.

The World Economic Forum’s Global Competitiveness Report 2015-2016 appears to support the view that corruption is less of a problem than widely thought. Among the most problematic factors for doing business in South Africa, respondents ranked corruption behind restrictive labour regulations, inefficient government bureaucracy, inadequate supply of infrastructure, policy instability, inadequately educated workforce, and crime.

A possible reason for the disparity between perception and expert opinion is the fact that there are no official statistics on corruption. In its annual crime statistics, the SAPS simply lumps corruption under the much larger category of “commercial crimes”.

That means that all we have to go on is the assessment of experts with skin in the game like the Risk Advisory Group, the anecdotal evidence that news reports provide, and the perceptions of the general public as reflected in surveys like those conducted by Transparency International.

There are reasons to believe that the experts might have a better handle on the extent of corruption than the general public. South Africa has a free and vocal press, which diligently digs into every corruption scandal they can find. It has a sound Constitution that establishes independent institutions to protect the public interest, and courts that are for the most part unafraid to enforce property and contract rights, and to hold government to account. This means that corruption cases are routinely paraded before the public instead of being swept under the rug. It stands to reason that this anecdotal evidence would significantly affect public perceptions of corruption as more pervasive and serious than it really is.

Any level of corruption is, of course, too much. Systemic corruption and social inequality are strongly linked, according to Transparency International. This, in turn, leads to popular disenchantment, which whips up support for populist politicians on both the extreme left and the far right, running on anti-corruption tickets. The problem with such populists, they argue, is that they rarely have both the intention and ability to tackle corruption as they promise.

Another reason that corruption perceptions matter is that they influence public priorities. If it is true, as the World Economic Forum maintains, that labour regulations, infrastructure, bureaucracy, the regulatory burden, electricity supply, policy instability, lack of education, health impacts and crime are worse for the economy than corruption, then those problems ought to be addressed with more urgency.

If we’re to get our priorities right, it is of critical importance that the SAPS reports statistics on bribery and corruption, separate from other commercial crimes. In the absence of hard data, however, it appears we may need to temper our perceptions of how pervasive corruption really is in South Africa. As serious as the allegations against Zuma and the Guptas are, the country may well have bigger fish to fry. DM

  • Ivo Vegter
    IvoVegterBW
    Ivo Vegter

    Ivo Vegter is a columnist and the author of Extreme Environment, a book on environmental exaggeration and how it harms emerging economies. He writes on this and many other matters, from the perspective of individual liberty and free markets. He is seldom wrong.

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