Government’s state collapse delusion

Businesses and the private sector in South Africa have been bending over backwards to assist the government through various partnerships to enable the state to do what it needs to do to deliver services and ensure the country grows.

However, minister in the presidency, Khumbudzo Ntshavheni, has taken a dim view of these efforts, instead accusing businesses and the private sector of trying to collapse the government and having no interest in building South Africa.

Speaking at a post-Cabinet briefing this past week, Ntshavheni commented on developments in the ongoing rand manipulation case, where 28 finance groups stand accused of fixing rand/dollar trades between 2007 and 2013.

UK-based Standard Chartered Bank was the latest of the accused banks to admit to the manipulation and paid a penalty of over R42 million in the Competition Commission’s case.

While responding to these developments specifically, Ntshavheni’s ire was directed at the private sector as a whole.

“We have maintained over the period that the performance of the rand and sometimes the performance of the economy has been manipulated by the private sector, which has no interest in the development of this country‚ which continues to engineer and do machination to make sure the government collapses,” she said.

What makes the minister’s claims against the private sector startling is that the rand manipulation case is not a new development.

The Competition Commission’s case has been going on for years, and Standard Chartered admitted guilt (to US authorities) back in 2019. Citigroup admitted guilt and paid a penalty that year as well – yet there were no allegations that the private sector was trying to topple the state at the time.

Businesses and the private sector have been left shocked by the accusation.

Business Unity South Africa chief executive Cas Coovadia said that the minister’s claims are patently false and were “extremely unfortunate” given the fact that businesses and the private sector at large were working with the government to fix the country’s multiple crises.

Over 100 business leaders have pledged to work with the government to save South Africa from collapse, working in the country’s energy, logistics and security sectors, all of which have crumbled under mismanagement, maladministration and sheer neglect under the state.

In fact, it’s private businesses that are now helping the government raise funds, draw critical skills and investment and lending their expertise to various government departments – under the initiative and involvement of president Cyril Ramaphosa – even to enable the state to do so.

“I hope that the minister will clarify her statement. From what we’ve seen, it’s far from the case, and far from the facts,” Coovadia said.

“It is surprising. Quite honestly, it’s shocking. The facts just don’t bear them out.”

Collapsing state

Ntshavheni’s comments are egregiously detached from reality – a reality where collapsing infrastructure, a power crisis, a water crisis, cripplingly low growth, rampant crime and severely high levels of unemployment are all markers of the government’s multiple failures.

A Harvard research study published earlier this month went into great detail about how, over the last 15 years, South Africa has seen broad-based state collapse across critical public goods and services.

There has been a deterioration in the provision of electricity, freight rail, ports, roads, water, and passenger rail. At a local government level, municipalities have been given big budgets and even bigger responsibilities but are largely ill-equipped to actually perform their duties.

The paper argued that the collapse in state capacity could be traced to recurring issues of gridlock, ideology, overburdening of public organizations, and political patronage – all at the behest of the governing party.

“After 15 years, attempts to stimulate the economy through fiscal policy and to address exclusion through social grants have failed to achieve their goals.

“Instead, they have sacrificed the country’s investment grade, increasing the cost of capital to the whole economy, with little social progress to show for it,” the researchers said.

“Three decades after the end of apartheid, the economy is defined by stagnation and exclusion, and current strategies are not achieving inclusion and empowerment in practice.”

Responding to this research, Ntshavheni simply said that “research is not absolute“, adding that the government is not bothered by the findings.

At the same time, she praised the provincial and national departments for improving their audits – hailing this as a victory and evidence that the state is not collapsing – despite another R14 billion in financial losses.

Read: R14 billion in losses – but don’t call it state collapse, says Cabinet