While this is good news for the country, it is somewhat negated by the fact that South Africa's credit rating could be downgraded by the end of the year if government fails to end political infighting, lift economic growth and reform debt-ridden State companies. This is according to ratings agency Moody's which rates South Africa only two positions above sub-investment grade.
Add to this that South Africa was ranked 105th out of 159 countries and territories included in the 'Economic Freedom of the World: 2016 Annual Report', and South Africa’s future economic prospects look rather dim.
This report measures the economic freedom, including factors such as levels of personal choice, ability to enter markets, security of privately owned property and rule of law. According to the Free Market Foundation (FMF), South Africa has steadily lost ground on the rankings. Last year, the country was 93rd, and in 2000, was just below the top 25% of countries in the world.
“It now ranks in the bottom 35%. It is time for government policy to start taking the country in another direction – towards economic freedom, high growth, a high demand for labour, prosperity and justice for all,” says Temba Nolutshungu, FMF Director, echoing the Moody’s assessment.
The fact that political interests are affecting South Africa’s economy has come to the fore with the news reports of the SARS “rogue intelligence unit” – the foundation of the Hawks investigation against Finance Minister Pravin Gordhan. In a new book, Rogue: The Inside Story of SARS’s Elite Crime-busting Unit‚ written by former SARS employees Johann van Loggerenberg and Adrian Lackay, the levels of political interference in the Revenue Service’s operations become very clear.
The book offers some explosive allegations: That the attacks on the elite investigative unit inside SARS started the moment it began investigating a giant cigarette smuggling ring which included companies that, at one stage, involved the president’s son Edward Zuma and his nephew Khulubuse; that smugglers and racketeers do not only have members of the Hawks and the intelligence community in their pockets, but have succeeded in getting the investigative unit – one of the most effective tools in the fight against tax evasion and organised crime – closed down; and that more than 50 top investigators and officials have left SARS during the last year or have been driven out of their jobs.
In addition, the book draws comparisons between the orchestrated programme to destroy SARS’ anti-corruption capacity – which involved planting mendacious reports in the country’s biggest Sunday newspaper – and the modus operandi employed to work General Johan Booysen, one of the country’s best detectives, out of his job as head of the Hawks in KwaZulu-Natal.
In a country that has seen allegations of “state capture” on the part of the Gupta family and various other forms of corruption that have come to light, none of these allegations come as a surprise. What is surprising is that despite the warnings from agencies such as Moody’s, the factions within government looking to enrich themselves have been allowed to continue unchecked while the country’s economy slips into the bottom half of the world’s economies.
How many more allegations (and proof) of corruption will it take to change this status quo? Or perhaps South Africa has resigned itself to becoming the next Zimbabwe – the world’s lowest investment destination with an economy that limps along in desperation.