ANALYSIS: State Capture wipes out third of SA’s R4.9-trillion GDP – never mind lost trust, confidence, opportunity By Marianne Merten marianne_merten
Quantifying the cost of State Capture is a Gordian knot. There are some costs that hit hard and immediately, although their final impact can be mitigated, at least to some extent, over time. Other costs creep on to the balance sheets of, for example, state-owned entities such as Eskom or government departments, where they look as if they belong as “finder’s fees”, “consultancies” and “commissions”, but they don’t, as these are effectively kickbacks.
But by 2014, economic growth had plunged to 1.5%, down from 2.2% just a year earlier, and fell further to 1.3% in 2015 on a consistent downward slide — ending at 0.7% in 2018. If the current modest 1.9% growth for 2019 does not materialise, serious questions must be asked as to whether the state of South Africa’s economy, and government’s ability to deliver on a better life, are just the delusions of a political elite in search for votes.
Gordhan, now public enterprises minister, in November 2018 testified before the Zondo State Capture Commission about the cost of this reshuffle:The devastating impact of this unexpected announcement on the South African economy is estimated to be approximately R500-billion… Over two days the market value of the country’s 17 biggest financial and property shares fell by R290-billion. The figure excludes the remainder of the equities market that also was hit by the decision.
Eskom’s debt ballooned from R40.5-billion in 2007 to R254.8-billion in 2014, and R419-billion today amid consistently above-inflation tariff hikes, effectively 170% over the past decade, in events that the 2018 parliamentary Eskom State Capture inquiry linked to various procurement deals and appointments of executives and board members.
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