Durban – The man on the street – particularly the poor man on the street – has the most to lose as concern that state capture has gripped the country grows.
“As long as there is speculation, there is not going to be long-term investment,” said economist Iraj Abedian yesterday.
The comments came as an application by President Jacob Zuma to stop the release of former public protector Thuli Madonsela’s report on state capture was being argued in the the North Gauteng High Court.
In a blow to cabinet ministers opposing the report being released, the Pretoria High Court yesterday ruled that the DA, EFF, United Democratic Movement, Congress of the People and former ANC parliamentarian Vytjie Mentor were now part of the “state capture” court wrangle.
As Judge President Dunstan Mlambo announced that the parties had won their battle to intervene in the legal wrangle, he also announced that Co-operative Governance and Traditional Affairs Minister Des van Rooyen’s application to interdict the release of the report had been “struck off the roll”.
The country was losing credibility because people felt that neither the president nor the ruling party were in control and investor confidence was going to decrease, Abedian said.
“In fact, it already has and that is the reason that growth rate is close to 0% – investors have abstained from engaging with the economy.”
And with a close to 0% growth rate, the government could not rally sufficient tax revenue to provide welfare and facilities for the people.
“Today the petrol price goes up and that means the man on the street pays more because the rand’s value is being lowered,” he said.
The irony, Abedian said, was that the more the president and the ministers who were close to him tried to prevent the release of the public protector’s report, the more confirmation there was that there was state capture.
“The fact that they are so hell-bent on preventing the report from being released pretty much confirms that they have something to hide,” he said.
Analyst Daniel Silke said, too, that the issues around state capture undermined confidence in the ability of the government to run its affairs.
“The idea that a certain group’s special interests could be finding favour, perverts the normal economic forces,” he said.
It discouraged investment if the country was seen to be conducting itself in “nefarious” ways.
Investors looked for stability, transparency and accountability, Silke said.
The most negative impact, economist Azar Jammine said, was on capital investment.
“If you look at economic growth, it’s been declining but it’s still positive,” he said. “But capital investment has been declining. Businesses just aren’t prepared to invest in the country and they’re probably dissuaded by the fact that they’re going up against other companies that are seen to be favoured.”