‘Justice is coming’
President Cyril Ramaphosa says the country’s criminal justice system is kicking into gear, as he tackles government and corporate corruption.
President Cyril Ramaphosa is pinning his hopes of attracting foreign investors and kick-starting economic growth on his clean up of the state and private sector corruption, and making sure those responsible for the graft are held accountable and even go to jail.
Ramaphosa said South Africa’s criminal justice system was going to be busy in the coming months, which implies the country could see visible action by law enforcement agencies against those involved in the public and private sector corruption.
He revealed this while addressing a question-and-answer session at the United Nations’ Council for Foreign Relations in New York.
He said the clean up of state institutions was part of a major project his government trusted would reposition the country’s economy in such a way that it would be attractive to investors.
He said the process was something that he was personally “firmly focused” on as the president.
“Those who are complicit should be accountable and those who are found to have done wrong should be able to face the might of the law,” Ramaphosa said.
He stressed that corruption in the country was not only the preserve of government and state entities – corporates were also deeply involved in graft.
Government had found a lot of corruption in the corporate world that had led to the loss of billions of rands through pension funds and other areas.
“Our clean up act is aimed at both the private and public sectors. In the next few months, I am sure that our criminal justice system is going to be busy dealing with those matters,” Ramaphosa said.
As part of this, he said, his government was repositioning stateowned enterprises (SOEs) and government departments. “Once we clean up our act in a number of SOEs as well as government departments, that will position South Africa much more as an investment destination,” he said.
The Investment Conference to be held in October in South Africa would raise about $1 billion (about R14.4 billion) over a period of five years.
“It will be a South Africa that is performing, that is repositioning itself to be attractive, not only to foreign investors but also to domestic investors,” he said.
The president explained that the domestic investors had either stopped investing in the country’s economy or they became timid and slowed down in their investment activities.
He said he was determined to reverse that.
Ramaphosa undertook to ensure that the country’s economy grew because he realised it was not growing at the level expected and the situation was exacerbated by the technical recession the country was experiencing.
Last week, he announced a stimulus package to inject money into the economy.
“We had to step in as the government to give impetus to grow the economy by pumping in money,” he said.
Ramaphosa added that South Africa had a high debt to service ratio and its borrowing capacity was limited.
The government hoped that both the manufacturing and export sectors would grow, said the president. – ericn@citizen.co.za
I’m sure our criminal justice system is going to be busy.
When a country introduces a fiscal stimulus package into a struggling economy, currencies and markets normally strengthen in anticipation of faster economic growth, job creation, and market-friendly policies.
However, the rand’s marginal decline and the muted market reaction last Friday after President Cyril Ramaphosa revealed a stimulus package aimed at putting SA’s damaged economy back on course suggests scepticism.
Ramaphosa’s plan mimics interventions by Indian Prime Minister Narendra Modi who, in 2015, set India on a course of raising billions from long-term international investors to fund infrastructure projects. But unlike India, there’s no money to fund new, productive investments to stimulate growth.
The Reserve Bank expects SA’s economy to grow by 0.7% in 2018; India expects 7.4%. SA’s budget deficit in relation to its GDP is expected to be 3.6% in 2018-19 (although latest estimates are 4%), while India expects 3.3%. And, although India’s debt-to-GDP ratio is projected to be 69% in 2018 (SA, 53%), it has economic growth to cushion the debt burden.
So why haven’t markets responded?
Daniel Silke of Political Futures Consultancy says any implementation of a stimulus package hinges on whether the government is able to run itself.
“What is the state of the bureaucracy? Are there officials that are patronage-focused rather than performance-focused? How do you make the state more effective? There are still big questions that remain.”
With just months to the election and the ANC deeply divided, there’s little chance Ramaphosa can kick the stimulus into gear.
Says Silke: “If Ramaphosa can secure a reasonable election victory for the ANC next year, then he will be more secure.”
Citibank’s Gina Schoeman rates the plan 8/10, saying reallocation as opposed to introducing more debt is a “positive move”.
Finance minister Nhlanhla Nene says Treasury has undergone an “excruciating process of reviewing underperforming programmes” to free up R50 billion.
More details will be unveiled in the mini budget on October 24.