Count cost in lives and opportunities lost
Listening to Public Enterprises Minister Pravin Gordhan’s budget speech on Tuesday I was swept by the blossom of greatness he embodies.
In Gordhan, and lately Lindiwe Sisulu on the Palestinian question, President Cyril Ramaphosa’s ‘new dawn’ is a bright light after the darkness of the corrupt Jacob Zuma regime. South Africans have answered the call to be sent to recapture the constitutional state, restore the state-owned enterprises (SOEs) and renew the promise of 1994.
Gordhan’s estimate of some R100bn that has been stolen does not talk of the opportunity costs of those billions. In a study we conducted at the Industrial Development Corporation in 2005 at the request of the department when it was under Alec Erwin, titled An Analysis of the Macroeconomic and Sectoral Impact of the Capital Expenditure Programmes of Eskom and Transnet over the Period 2005 to 2010, we showed the positive impact of an estimated R134bn spent by Eskom and Transnet over the period. The study showed that the average annual contribution to GDP over the five-year period was equivalent to 1.3% (in 2004 terms). This was significant, taking into consideration the high demand for imported goods.
Moreover, about 55,200 jobs were created over the five-year period. Of those jobs about 33,000 were in the construction sector and were regarded as temporary jobs that were unlikely to be sustained upon completion of the capital expenditure (capex) programmes of Eskom and Transnet. Government revenue was projected to increase by slightly over R11bn over the fiveyear period due to tax collection. The additional tax revenue would have been derived from: corporate taxation via linkages with domestic suppliers of goods and services associated with the capex programme; personal income tax paid by all employees for work rendered through linkages with the programme; and indirect taxation such as value-added tax and customs and excise duties payable by South African businesses or individuals whose incomes were linked either directly or indirectly with the capex programme.
The opportunity cost of the Zuma presidency remains a research question. Gordhan’s insistence that board members shall play no role in the evaluation and adjudication of tenders; directors and employees must be prohibited from doing business with SOEs; and lifestyle audits should be carried out on key officials within SOEs, is music to the ears of South Africans. Those in the corrupt Zuma networks, and denialists of state capture who argue that Gordhan is in vendetta mode because of his firing by Zuma, should take heart that he is also holding to account private institutions such as McKinsey, Trillian and Regiments, which colluded in state capture. These firms and the people involved need to be thoroughly investigated and, if criminally prosecutable, the law must take its course and the proceeds of crime be recovered.
Despite the “new dawn” and Gordhan’s greatness, the ANC remains a major concern. Its deployment committee has historically chosen SOE managements and boards. Some of the cadres in the ANC have allegedly colluded with the board members in the awarding of contracts in state capture, including departments across all three tiers of government.
Moreover, the notion that has been articulated by ANC secretary-general Ace Magashule that allegations do not amount to guilt may be legally correct, but at some point somebody has to carry the can.
Dark clouds hang over the “new dawn”. Whether it is children dying in pit latrines, workers shot by police at places such as Marikana, or the Life Esidimeni debacle, the ANC is yet to own up.