Cabinet ministers are not friends; they are political appointees. They serve at the pleasure of the top leader.
Finance ministers are key, especially in a modern economy. They are responsible for the technical management of finances and to put money behind government programmes destined to better people’s lives.
The South African government is one of the top 30 spenders in the world today and it would be a big prize if you could determine where the money gets spent.
Trillions of reasons why crooks want to be here
South Africa has a very attractive nest egg.
We have the eighth-highest pension fund assets in the world in dollar terms and our State-controlled pension fund is among the top ten largest pension funds. In total, our pension fund assets were over R4 trillion in 2015, and along with other long-term savings, the total is closer to R5 trillion.
Add a general government expenditure budget of over R1.3 trillion to the above assets and there is a rather large honey pot. Then there is some control of banking and private pension fund rules and the ability to ask them to invest a certain portion of money in prescribed assets or programmes, such a nuclear power station.
Add to this the size of the South African State-owned enterprises (SOEs): some of them are among the biggest in the world. Eskom is one of the top ten power producers; Transnet Rail is one of the top 20 rail networks; our ports’ turnover is probably also in the top ten international port operations. Then there is also South African Airways, forestry, Denel and 400-plus other SOEs. The total expenditure is probably close to a R1 trillion a year.
If one adds the government budget, pension fund assets and SOE spending together, National Treasury controls or has influence over an amount of more than R7 trillion a year.
This represents one of the biggest combined nest eggs in the world, and it is a great attraction to thieves. This huge amount of money provides the motivation, and they are very cognisant of this honey pot.
Thieves are clever, and greedy.
Economically, the following is very likely to happen:
South Africa’s economic performance is poor. South African citizens used to be richer than the average world citizen, but by 2015 we were 15% poorer. Since 2007, SA’s GDP per capita has declined ever quicker, relative to the world per capita GDP. It is inevitable that this decline will speed up, as South African per capita income compared with the global per capital income is already in decline. (See chart)
The economy will struggle to shake off this brazen attempt in State capture.
The currency has already devaluated by 10% and South Africans will pay more for food, petrol and virtually everything else.
Yields on government bonds have risen, leaving less money for actual government expenditure. There is therefore less money for poverty alleviation and even less to pay salaries to civil servants. Imminent credit downgrades will also not help.
Investors have and are withdrawing without much fanfare or formal announcements. Jobs will not be created, which will lead to increased unemployment and poverty.
It won’t stop there. Government money will be misspent. We will have less money to spend on the roads we need and we will spend more on things we do not need.
Our pensions become a way to pay for the things we do not need – eg nuclear. The returns on our pensions will decline and future pensioners will becoming poorer.
The economy already had strains of corruption and kept many investors away and I believe it will now keep all investors away from our economy.
Friends and colleagues are immigrating, and companies I do business with are seriously looking at anywhere but South Africa. Even conference organisers have booked events in other countries rather than here due to visa restrictions.
Fellow citizens, we are living in a country where the honest are punished, and the corrupt are promoted.
In Africa, putting the hyenas in charge of fat goats leaves only fat hyenas, while you will go to bed hungry. Now the hyenas are in charge.