Leave corrupt no space
ZONDO INQUIRY: CONSEQUENCES ESSENTIAL TO SHOW SA’S TURNING A CORNER
State capture commission has exposed the rot, but consequences vital to show SA is turning corner.
President seeks investment but authorities have too many opportunities to change policies.
President Cyril Ramaphosa has dedicated a lot of time to encouraging investment into South Africa to stimulate the economy.
At the Mining Indaba 2019 he insisted that SA’s mining industry is now more stable and ready to deliver attractive returns.
However, this message alone isn’t enough to unlock massive investment. As Baker McKenzie’s Morne van der Merwe says, there’s still much investor scepticism towards SA’s mining sector.
Years of policy uncertainty under the previous minister and the unfriendly business environment he created left many companies wary.
Consequences
While what has come out of the Commission of Inquiry into State Capture chaired by Raymond Zondo has been damaging to SA’s reputation, the process itself carries a clear positive.
The challenge will be what happens with the findings, Van der Merwe argues.
“That is where we will have an opportunity to show that we are sincere about changing course because if ... there are no consequences, they will happen again.”
Having a new national director of public prosecutions creates some optimism that the system can be cleaned up.
Ramaphosa also committed to action, saying at the Mining Indaba that the prosecuting authority will act where evidence of corruption has been found.
Narrow the opportunities
The details coming out of the commission should also cause government and the private sector to reflect on what must be done to prevent these kinds of issues happening again.
In mining, this should lead to a discussion about the extent to which the minister and the department of mineral resources can exercise discretion in a number of areas.
“Other countries have legislated a lot of policies, but in South Africa many are promulgated by the minster,” says Boston Consulting Group’s Hans Kuipers.
“If you legislate it, it is much harder to change. The other element is reducing ministerial discretion … the ability of a minster to deviate from certain rules or make exceptional decisions.”
The development of the latest Mining Charter brought this issue to the fore. It sets out industry transformational imperatives, but has been changed three times in 15 years and a minister can decide on a revised charter at any time. It also leaves much up to the interpretation of officials tasked with checking its implementation. Says Van der Merwe: “In various parts of this economy there are many stakeholders who are passionate about transforming the economy...
“But if you could find a way to eliminate subjectivity in achieving that transformation, that would go a long way towards people feeling that there is less space for corruption.”
Reducing that space is something investors need to see happening.
“When an international investor looks at opportunities in South Africa the first thing they ask themselves is whether there is space for corruption….
“We have to ask if there are things we can do to narrow that opportunity, whether through technology, different systems, or maybe statutory certainty as opposed to this kind of discretionary power.”