Legal wrangle over state capture report deters foreign investors

DURBAN: The man on the street and, in particular, the poor man on the street has the most to lose as concerns of state capture grow.

So says economist Dr Iraj Abedian. “As long as there is speculation, there is not going to be long-term investment,” he said yesterday.

The comments came as an application by President Jacob Zuma to stop the release of former public protector Thuli Madonsela’s report on state capture was being argued in the high court in Pretoria.

In a blow to cabinet ministers opposing the report being released, the high court in Pretoria yesterday ruled that the DA, EFF, UDM, Cope, and former ANC parliamentarian Vytjie Mentor were now part of the “state capture” court wrangle.

Judge Dunstan Mlambo also announced Co-operative Governance and Traditional Affairs Minister Des van Rooyen’s application to interdict the release of the report had been “struck off the roll”.

The country was losing credibility because people felt that neither the president nor the ruling party were in control and investor confidence was going to decrease, Abedian said,

“In fact, it already has and that is the reason that growth rate is close to 0 percent – investors have abstained from engaging with the economy.”

And, as he explained, with a close to zero percent growth rate, government could not rally sufficient tax revenue to provide welfare and facilities for the people. “Today the petrol price goes up and that means the man on the street pays more because the rand’s value is being lowered.”

The irony, Abedian said, was that the more the president and the ministers, who were close to him, tried to prevent the release of the public protector’s report, the more confirmation there was of state capture.

“If they had nothing to worry about, they would let the process unfold.”

Analyst Daniel Silke said too that the issues around state capture undermined confidence in the country’s governance and in its ability to run its affairs.

“The idea that a certain group’s special interests could be finding favour perverts the normal economic forces.”

It was seen as negative by foreign and domestic investors and discouraged investment to be conducting itself in “nefarious” ways.

Investors looked for stability, transparency and accountability, Silke said.

“The last thing they look for is pandering to special interests.”

The most negative impact, economist Dr Azar Jammine said, was on capital investment.

“If you look at economic growth, it’s been declining, but it’s still positive. Businesses just aren’t prepared to invest in the country and they’re probably dissuaded by the fact that they’re going up against other companies that are seen to be favoured.”