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Here’s an irony: South Africa’s vocal anti-corruption fighters have helped to massage the country’s reputation in an index of corruption perceptions.
What’s more, growing resistance to corruption by civil society is sending out a message to the world that the problem is easing a little. That is highlighted by leading South African economist Azar Jammine who analyses the numbers in Transparency International’s ranking, here, noting that South Africa’s ranking has deteriorated but its score has improved.
Also noteworthy is that South Africa isn’t the only country in the grip of corruption and state capture. This is a problem that has been growing worldwide. While the incremental changes might be good news to some, the fact of the matter is that financial irregularity and graft are contaminating investor sentiment and deterring South Africans from investing more in their own country.
Emigration is a big topic of conversation at Saturday afternoon braais and among people who see business conditions continuing to deteriorate over the medium to long term.
Nelson Mandela gave South Africa hope that the country would not descend into patronage-induced decay as has been the way elsewhere in Africa. However, it’s looking a lot like South Africa has settled into a place on the corruption perception tables along with global friends like Brazil. – Jackie Cameron
By Azar Jammine*
Transparency International has just released its updated measures of perceptions of corruption in different countries. It is based on an analysis of 176 countries, with scores between zero and 100, the former being the extreme of corruption and the latter implying no corruption whatsoever.
The organisation found that 69% of the 176 countries analysed achieved a score of less than 50, “exposing how massive and pervasive public sector corruption is around the world”, with more countries having seen this score deteriorating than improving.
The least corrupt countries were found to be Denmark and New Zealand, with scores of 90, followed by Finland and Sweden on 89 and 88 respectively, whilst at the bottom the most corrupt country was Somalia, on 10, followed by South Sudan on 11, North Korea on 12 and Syria on 13.
On the positive side, South Africa was one of the minority of countries whose CPI improved, albeit marginally. It is particularly welcome to note that the corruption score has edged upwards from a recent low point of 42 in 2013, to 44 in 2015 and 45 in 2016. Back in 2004 when the CPI was first introduced, South Africa’s CPI measure was marginally better than it is right now, at 46.
Unfortunately, on the negative side, there were significantly bigger improvements in many other countries in the 2016 measurement and as a result South Africa’s ranking fell to 64th least corrupt country. At least it is still in the less corrupt half of countries.
Africa presents a mixed bag
What is significant is that South Africa’s ranking on corruption seems to have improved relative to most other African countries.
In recent years we have been commenting on the fact that even though most African countries were measured as being more corrupt than South Africa, the majority had recorded improvements, whereas South Africa’s CPI had fallen from 47 in 2009, to a low point of 42 in 2013. Analysis of the CPI for African countries for 2016 reveals a mixed bag.
There were marginal improvements in the measure of corruption in Mauritius, Senegal, Ivory Coast, Tanzania, Nigeria, Kenya and amazingly Zimbabwe and Angola, off very low bases.
However, there were deteriorations in the case of Ghana, Lesotho, Egypt, Mozambique, Madagascar, the Democratic Republic of Congo and Libya. In terms of rankings, there were sharp falls for most African countries, with even those like South Africa whose score improved, witnessing a deterioration in their rankings.
One suspects that the sharp decline in economic growth in African countries in 2015/2016 on the back of the decline in commodity prices, resulted in greater pressure on finances and as a result elicited greater difficulty in combating corruption
The majority of African countries had rankings in the bottom half of the list. The minority of countries with better rankings on corruption than South Africa include Mauritius, Rwanda, Namibia, Botswana and the Cape Verde.
Trend for BRICS marginally encouraging
It is also encouragingly interesting to note that South Africa’s ranking is also superior to all its BRICS counterparts, albeit not massively so. All of China, Brazil and India were ranked 79th most corrupt countries out of 176 countries compared with South Africa’s ranking of being the 64th most corrupt country.
Whereas South Africa had a CPI of 45 in 2016, up from 44 in 2015, Brazil’s CPI was lower at 40, but was up from 38 in 2015, although down on 43 in 2014.
In the case of China, it had the same CPI as Brazil in 2016, at 40, up slightly more steeply, from 37 in 2015 and 36 in 2014. Amazingly India also had the same CPI as Brazil and China, at 40, with its CPI rising from 38 in 2015, identical to Brazil. The laggard in terms of being the most corrupt of the group was Russia, with a CPI of 29 which was unchanged on 2015 but up on the 27 of 2014. In other words, with the exception of Russia, the CPI in 2016 improved for all BRICS countries.
Russia was ranked ominously as the 131st most corrupt country.
Bearing in mind South Africa’s dalliances with Russia over the nuclear power deal, Russia’s high level of corruption must be seen as potentially worrisome in the event that agreements are reached with the country.
On the negative side, although South Africa’s CPI measure was better than the other four BRICS countries by a clear margin, the longer term analysis shows that whereas South Africa’s measure declined marginally over the 12 year period 2004 to 2016, the other four BRICS countries experienced an improvement over this 12 year period.
This suggests that even though South Africa’s corruption is less than the others, the others are making slightly more headway in combating it than South Africa did through 2016.
Populism not the solution to corruption
Transparency International offers a very useful analysis of the nature of the environment which breeds corruption. It clearly sees corruption and social inequality reinforcing each other, “leading to popular disenchantment with political establishments and providing a fertile ground for the rise of populist politicians”.
One infers the rise of populism in many countries, both advanced and emerging last year, was a function of rising inequality and perceptions of increased corruption.
The organisation also concludes that its analysis shows that increases in corruption had been associated with increased populism, authoritarianism and declining economic growth. It cites Hungary and Turkey as primary examples. In contrast, it points to Brazil and Argentina as examples of where populist governments were ousted and perceptions of corruption decreased as a consequence.
Far from being the panacea to reducing corruption, it sees populism as reinforcing crony capitalism which if anything reinforces corrupt practices. These are also associated with attempts at cracking down on civil society, media freedom and independent judiciaries.
South Africa’s CPI ought to record significant improvement next year
Relating South Africa’s situation to the causes of corruption and the solutions to the problem as presented by Transparency International, one is quite encouraged by the trends of the past year.
Far from allowing corruption to explode, civil society in the country seems to have risen against corrupt practices in many different areas, from the top of government all the way through to private sector instances of corruption. The media has played a very important role in alerting civil society to these practices, whilst the judiciary has striven to maintain its independence against many odds.
One is also greatly encouraged by the efficiency of democratic processes in the country which were proved in the local government elections.
All these factors are likely to see South Africa’s CPI improving markedly when the new results are presented in a year’s time. Indeed, one would like to think that the encouraging trends in regard to the groundswell of opposition to corruption was partially instrumental in preventing South Africa’s credit rating from being downgraded to junk status late last year.
Superficially, some might argue that the publication of the “State of Capture” report by the Public Protector in November will have highlighted corrupt practises in South Africa and in so doing might jeopardise the country’s forthcoming CPI rating. However, we would like to think on the contrary that the very fact that the country was able to publicly report such practices will enhance rather than jeopardise its future CPI rating.
Credit rating agencies had feared that corrupt practices might see connected politicians raiding government coffers like never before and in the process increasing the public debt to unacceptably high levels. This has clearly not happened, in part because of the vehement opposition to attempts at the capture of the National Treasury.
There is of course no room for complacency regarding the fight against corruption.
To some extent the concentrated nature of South African business and state-owned enterprises are a structural impediment to higher economic growth, not only because of the manner in which they impede market forces and result in higher than necessary prices, but also because their institutional existence is conducive to greater corruption.
This represents a further reason why it is necessary to try and break down monopoly power and encourage small business enterprises and entrepreneurship as a key structural reform which might enhance higher longer term economic growth and job creation.
* Azar Jammine is the chief economist at Econometrix.
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