State of Capture: Corruption in Jacob Zuma’s South Africa

This is from Quartz Africa: 

The 355-page report detailing corruption in South Africa’s ruling party offers one rare uplifting moment. In the report, deputy finance minister Mcebisi Jonas reveals more details of how he turned down an offer by the powerful Gupta family of 600 million rand (about $44 million) to be the country’s finance minister.

Jonas, in an interview with Thuli Mandonsela, the country’s former anti-corruption chief who spearheaded the report released today, said he had agreed to meet with president Jacob Zuma’s son Duduzane Zuma on Oct. 23 last year, a few months before then finance minister Nhlanhla Nene was dismissed, kicking off a hailstorm of corruption allegations against the president.

Jonas met the younger Zuma at the Hyatt Regency hotel in the Johannesburg suburb of Rosebank where Zuma asked if they could move to a more private location for discussions “with a third party.”

Jonas was then taken to the Gupta compound in the suburb of Saxonwold where they were joined by Ajay Gupta, the eldest of the Gupta brothers, who briskly informed the deputy minister that “they had been gathering intelligence on him and those close to him.” Gupta informed Jonas that they were going to make him minister of finance, to which Jonas said that only the president could make that decision.

You can download the full State of Capture report here (pdf).

For more on the history of corruption in South Africa see here.

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Who’s responsible for South Africa’s woes? Zuma or the ANC?

I raised this question in a post last year.

Friend of the blog and Harvard-trained historian Matthew Kustenbauder has this thoughtful response (posted with his permission. Emphases mine).

Hi Ken,

Interesting post on South Africa’s recent rollercoaster and explanations for the economic downturn under Zuma’s presidency.  A few quick comments:

I agree South Africa’s current woes may be attributed to ANC policies, not President Jacob Zuma alone.  Take the issue of land, for example, about which Mr. Mngxitama is as passionate as he is wrong.  As I pointed out previously on this blog, the politics of land redistribution in South Africa are tied to the ANC’s historic decision to support and strengthen traditional authority in the former bantustans.  In short, the ANC forged an alliance with traditional leaders to bolster its negotiating power with the apartheid government in the 1990s and, afterwards, to win elections.  Mozambique served as a cautionary tale: civil war broke out after the socialist liberation government FRELIMO abolished chiefs and traditional forms of authority outright.  The ANC’s entrenchment of traditional chiefs and kings has had a ripple effect across South Africa, creating a drag on the rural economy, locking up productive agricultural land and capital assets, not to mention denying rural people equal justice under the law.

I also appreciate the argument, and agree to a degree, that both Mr. Zuma and Mr. Mbeki are ANC cadres.  When the opposition Democratic Alliance argue that somehow the country was in good hands until Mr. Zuma came along, it is more a political manouver to appeal to the black middle classes, many of whom are embarrased by Mr. Zuma and favoured Mr. Mbeki, than it is a faithful rendering of the historical record.  Thabo Mbeki was, despite his polished veneer, a disaster on many fronts, including but not limited to: unrepentant AIDS denialism, cadre deployment as an ANC policy, racial politics, silencing of internal opposition within the ANC, and a narrative that counterrevolutionary forces lurked within the media. These ideas and practices either began or were ramped up to become de facto party policy under Mr. Mbeki’s presidency.

I disagree, however, that Zuma and Mbeki represent nothing more than two cadres of the same party.  For one thing, the challenges facing South Africa today are different than those during the Mbeki years.  At that time, South Africa still luxuriated in the glow of 1994’s transition to democracy and the Madiba magic of Nelson Mandela had not yet worn off.  Mbeki was a skilled orator with global leadership aspirations, the likes of which have not been seen in South Africa since Jan Smuts was Prime Minister during WWII.  But it is not simply Zuma’s halting English, or his multiple wives, countless offspring, traditionalism, patriarchy, and coziness with Russia, China, and Sudan that make South Africans uneasy.

What is so disturbing – and what Mbeki assiduously avoided – is Zuma’s overt corruption. The most public evidence includes: Nkandla, the Gupta family’s illegal landings at Waterkloof Airforce Base, a prolonged legal battle over spy tapes that implicate him in fraud dating all the way back to his time as Deputy President (for which Mbeki sacked him and Schabir Shaik was found guilty and went to jail), and the most recent dismissal of Nhlanhla Nene for standing in the way of sweetheart SAA and nuclear deals that would have yielded tenders for Zuma’s friends and family.  If Mbeki was a loyal cadre who represented the ANC’s failed policies, Zuma is a loyal cadre who represents the ANC’s descent into patronage, corruption, and jobs for pals hidden behind a façade of election-time slogans, “our glorious struggle history” and “A Better South Africa for All.”  

Andile Mngxitama, booted out of the EFF, and firebrands like him who drone on about the ANC’s errant support of neoliberal policies and the tragedy of Mandela’s compromise during the political settlement period have little appreciation for just how far South Africa has come since 1994. Nor do they grasp the direction in which South Africa must go – and must go soon – to avoid a[n] even more tragic tailspin.

To give just one example, a major problem in South Africa has not been, contra Mr. Mngxitama, that capitalism has been prioritised. Rather, grassroots capitalism has been far too constrained – not just by government overregulation but by monopoly capitalism sheltered by the state.  This is a historical dynamic inherited from the apartheid-era National Party, one that the ANC never addressed, mainly because such arrangements benefitted the ANC so long as they controlled the levers of the state.

The number of state owned enterprises in South Africa – over 700 by the last count – is staggering for a country so small.  Just one, South African Airways, has drained well over $2 billion in bail-outs from state coffers in two decades. The energy sector is even more dire: Eskom, another state owned enterprise, has a near complete monopoly over energy generation and a complete monopoly over its transmission.  Due to a lack of capitalist competition, the country’s electricity supply is not just overly expensive, it is also tightly constrained. Last year South Africans plunged into darkness, and for some time now manufacturers and other industrial electricity consumers have actually been paid by the state to reduce their operations.

The result is that South Africa’s manufacturing sector is less competitive globally and unable to expand to create the jobs so desperately needed at home, where there is a 30% unemployment rate.  There are countless similar examples, where state owned enterprises should have been privatised, or at the very least private companies should have been permitted to enter the market and compete.  What must be remembered, however, is that the country’s economic system, designed by the old National Party, is now controlled by and benefits the African National Congress.

Similarly, in the private sector, too many large companies have a monopoly, making the cost of entry for small companies far too expensive. Government labor regulations and aggressive trade union action ensures that only the largest companies with the deepest pockets can comply and survive. Large private companies – like the mining groups, agro-processing operations, banks, telecommunications companies, and industrial manufacturers – operate with few competitors. Relatively small players in sectors like the textile industry have closed their doors and relocated to countries where labour is more productive, regulations more lax, and costs are cheaper. Too few South African companies can compete globally.

There may be a kernel of truth in Mngxitama’s claims, but his diagnosis is overly simplistic, ideological, and ahistorical.

 

On Zumaphobia and the policy failures of the ANC

A lot has been written about Jacob Zuma’s failures as president of South Africa, most recently his odd decision to fire his widely respected finance minister, Nhanhla Nene. Zuma replaced Nene with an unknown ANC MP, David van Rooyen, only to replace van Rooyen with former finance minister Pravin Gordhan after intense pressure from the media and the markets.

Sources indicate that Mr. Nene was fired for holding the line on fiscal discipline.

Much of the analysis so far has focused on President Jacob Zuma — his increasing personalization of power within the ANC, corruption, and even his private life.

But in an interesting piece Andile Mngxitama questions this Zuma-centric narrative, instead focusing attention on wider policy failures within the ANC. Mngxitama argues (correctly, I believe) that:

Both Mbeki and Zuma are ANC cadres through and through and it’s the party policy that determines what they do. Zuma has not strayed from the ANC policies and no one has yet made this claim in any meaningful way. So, if it’s not policy that is the problem, how do we judge Zuma’s performance?

The main problem is that his detractors fundamentally agree with the ANC policies and they have therefore chosen to find fault with Zuma the man and thereby rob us of a useful analysis of why things are falling apart. A shift from Zuma to policy would also show that his presidency is a product of policy; the template for things to fall apart was designed by his predecessors.

Zuma’s sin, which has been missed by the analysts, who are too driven by “Zumaphobia”, is that he has not been able or willing to halt the downward spiral, which is essentially a byproduct of ANC policies. The main policy plank of the ANC since it took over in 1994 has been correctly described as neoliberalism – the privileging of capitalism as the driver of society.

The implications of this policy direction are to increasingly remove the state from society and the economy and allow the profit motive to determine who gets what service. The state privatises assets and those it keeps are similarly managed as if they are capitalist entities.

The piece at times sounds anti-market. But don’t let that distract you from its succinct understanding of the political economy challenges facing South Africa.

In 2008 the ANC recalled then President Thabo Mbeki. There is no reason to believe that President Jacob Zuma has totally eclipsed the party machinery. Indeed this has been made clear by his quick retreat after the brazen attempt to weaken the finance ministry.

Recent events in South Africa suggest that the party of Mandela is no longer(if it ever was) the voice of the people. But this outcome cannot be pinned on Zuma. The party elite, including Zuma, largely remain hostage to the post-apartheid political settlement. Meanwhile, the country’s deplorable economic indicators are adding fuel to the fire that is the Economic Freedom Fighters (which is increasingly sounding more and more mainstream and in tune with the frustrations not just of South Africans, but younger Africans in general north of the Limpopo). On a recent tour of London the EFF leader, Julius Malema, held meetings with CEOs of companies with interests in South Africa — a signal that these companies appreciate the potency of his message of economic freedom.

Zuma may be a one-term president

Back when he dislodged Thabo Mbeki South African President Jacob Zuma promised that he would only serve one term. But having tasted the power of the presidency, he now wants a second term. His bid, however, has not been well accepted within the ANC.

Although it is common knowledge that the much-married Zuma wants a second term he has remained equivocal on the issue, at one point saying “I never said I would serve one term and I have never said that I would want two terms”  (The New Age reported on Wednesday, June 8th).

The Africa Confidential reports:

Zuma’s main rivals, Tokyo Sexwale and Deputy President Kgalema Motlanthe, are trying to fix it so that Motlanthe would be a one-term president, Sexwale would be his deputy and Paul Mashatile, Gauteng’s provincial leader and Premier, would be ANC national chairman. They may offer a deputy presidency to Lindiwe Nonceba Sisulu, the Defence Minister and Zuma’s ally. Sisulu and Sexwale, however, do not get along.

An anti-Zuma tirade erupted from the General Secretary of the Congress of SA Trade Unions, Zwelinzima Vavi, who said there is leadership paralysis in the ANC and warned that the country is in danger of ‘imploding’. He criticised Zuma’s ‘doublespeak’ on economic issues.

More on this here.

Quick hits

The world marathon record is back in Kenya, where it belongs.

Zambian Economist has nice maps showing the results of the just concluded general elections.

(Dada) Kim on Haba na Haba has a story on the continuing decline of Malawi into overt and brutal dictatorship. President Bingu wa Mutharika recently appointment his wife and brother to the cabinet. This reminded me of this paper on the inefficient extraction of rents by dictators.

President Zuma of South Africa still hasn’t established his dominance within the ANC (and probably never will).

The drought in the Horn has thus far claimed 10,000 lives. The Bank is increasing its aid package to the region.

Malema on trial

The video is worth watching. The lawyer cross-examining Malema actually makes the buffoon leader of the ANC youth league seem sane.

The South African land issue is a Zimbabwe waiting to happen. The sooner everyone accepts the truth the better.

Malema’s buffoonery is founded on real grievances about the distribution of productive land in South Africa. The more responsible elements in the ANC and those that benefited from decades of Apartheid disenfranchisement should wake up and smell the rooibos.

ht Eric Mibuari

The Mail & Guardian is reporting that the trial of ANC Youth League leader Julius Malema for hate speech is entering its second week. Malema is charged with hate speech for singing the South African struggle song “Dubul’ibhunu,” which translates to “Shoot the Boer.” Malema maintains that he has the right to sing the song, chanting the controversial lyrics at the courthouse.

This case is interesting because struggle music is a major part of South African culture, particularly black South Africans. The Boers participated in the oppression of black South Africans, even though they maintain that they are ethnically and culturally different from Afrikaners.

more on this here.

corruption in South Africa

South African democracy still has a long way to go. My greatest fear is that ANC supremacy might get into the heads of the party bosses and have them collapse the distinction between party and state. There are already allegations of corruption within the top ranks of the ANC. Ironically, if corruption is to be tackled head on within the ANC, Jacob Zuma is the right man for the job, his own failings notwithstanding. He seems to have a direct connection with average ANC supporters and could use this to rein in party bosses, or at least make them steal less.

It is hard being a disciplined hegemonic party. Tanzania’s CCM is a lesson in what the ANC should avoid. Botswana’s BDP might be a better example of a relatively disciplined hegemonic party. The party has ruled Botswana since 1966 without falling into the temptations of grand corruption and power grabbing.

Edit: Recent events have shown cracks beginning to form within the BDP. The world is watching what Ian Khama, son of Seretse Khama is prepared to do to secure his presidency in the face of increasing opposition.

Getting to know Zuma

This month’s Atlantic Magazine has an interesting piece on Jacob Zuma, South Africa’s president. Turns out that there are more people out there (besides yours truly) who are somewhat optimistic about a Zuma presidency. The author of the piece presents a fairly balanced picture of the man (Zuma) and is definitely worth reading. Read on ….

still waiting for Zuma’s foreign policy agenda….

South African President, Jacob Zuma, appointed his cabinet with no surprises. The question on most people’s minds was whether he was going to retain Trevor Manuel, the man who has been South Africa’s finance minister for over a decade, in the same post. As things turned out he moved Mr. Manuel to the national economic planning commission and gave a nod to former taxman Pravin Gordhan to head the finance ministry. Zuma’s cabinet appointments were largely tame, with the main complaints being that the cabinet was too big. The appointments showed that Mr. Zuma is not going to be the crazy populist that many had feared leading up to his election. It looks like he is going to take a measured approach to solving South Africa’s economic and social problems as the country wades through an economic recession.

So much for his domestic agenda. Now let us hear about Zuma’s foreign policy, in particular what he has to say about governance in Africa. Zimbabwe, The DRC, Somalia, Sudan and Chad are all problems that require the attention of the most powerful man on the Continent. President Zuma should not allow the Libyan clown, Muamar Gadaffi, to be Africa’s spokesperson. He may be tainted domestically but his ANC credentials can still take him a long way on Continental matters. The sooner he establishes a presence on the Continental stage the better.

bring him his machine gun

South African voters have spoken, and Jacob Zuma will be their next president. With half the votes in the ANC had over 65% of the votes, its closest rival had 18%. Now the only question that remains is whether the ANC will get more than two thirds of the votes to make it possible for it to change the constitution at will. Most people, in the interest of true democracy (including yours truly), are not particularly enthusiastic about such a prospect.

Now that he is president-elect, Mr. Zuma must clearly let the world know what he intends to do as president. Will he be a respectable statesman or will he be the clown of a leader that he fancies himself as in the eyes of the masses – initial pictures of his election victory celebrations show him on stage dancing with a group of women. (This is not really statesman-like Mr. Zuma, especially given your colorful marital history. The less of this side of you we see in the next few years the better).

Many challenges await Mr. Zuma. South Africa’s high unemployment and crime rates top the list. The other big issue will be land reform. The legacy of apartheid in South African land ownership must be dealt with at some point. Mbeki did not have the spine or the populist touch to do it. Mr. Zuma might be the right man for the job. I hope that the president-elect will not treat his presidency as an exercise in post-apartheid justice as embodied in his favorite campaign song “bring me my machine gun” but that he will do everything that he does within the confines of the law.

He may not be the wise man we would have wanted for the land of Mandela, but he will be president. Because of that I can only wish him success.