PETER ATTARD MONTALTO: Wanted, institutions to prevent state capture

Posted in: i-Blog on November 6, 2018

Barbara Hogan prepares to testify at the Zondo commission of inquiry into state capture. Picture: ALON SKUY

This column was first published in Business Day.

It’s amazing what a shift in perspective can do.

Sometimes it will be seeing things from a different angle, sometimes the passage of time, sometimes it’s the same thing that’s always been there just exposed in a new setting.

Barbara Hogan’s testimony to the Zondo commission last week caused a shift in perspective, especially as she zoomed in on ANC cadre deployment.

The media suddenly seemed to collectively rediscover that this was an issue because of the calm and quiet of the Zondo commission and the credibility of Hogan. There was a shift in perspective that this seemed to offer.

Yet of course cadre deployment has been a cornerstone of the ANC’s National Democratic Revolution policy (ideology might be a more appropriate term) since well before the transition to democracy. All this used to be very transparently presented on its  website until there were IT issues.

The Zondo commission — whilst not really changing the narrative per se (that has been in place over the last two years) — is, through the exposition of so much new detail, creating a shift in perspective about how SA  has operated as a complex political economy machine.

Cadre deployment has been a topic of note since I started looking at SA, yet there have been few instances where it has been fully and robustly called out until recently. State capture has been seen to be facilitated by many things, but at its core has been the right people in the right place. We are not talking about political posts here, but throughout the wider state, including state-owned-enterprises (SOEs).

SA needs to actively have a debate about if, say, recent calls to sort out municipalities for instance, or sort problems at SOEs, will ever be possible without an end to cadre deployment.

This wide lens perspective is needed, rather than getting lost in the huge volumes of (nevertheless very fascinating and important) detail that is coming from the Zondo commission, otherwise the same mistakes can be made again.

Crises can create sudden shifts in perspective and thinking if seized. State capture has been that opportunity and silver lining for SA. Yet it seems some of the urgency and focus has been lost already.

Take the Treasury. Through the two years from Nene-gate, it was lifted up and guarded by civil society and the media — there was an outcry when Kenneth Brown left at the end of 2016. Yet since then the clamouring around it has gone quiet.

In the past few years it has seen a significant loss of staff — many to the Reserve Bank (which is now very well-capacitated indeed) — and needs to have much greater capacity in the office of the chief public procurement officer to ensure state capture can never happen again.

In a tight fiscal world, where there are scarce skills resources in the country,  the Treasury needs both internal capacity but also to crowdsource support.

The Treasury wins awards for its world class transparency, as seen with the Vulekamali budget portal or the excel pivot tables they provide. Yet, there are several more layers of information at the Treasury’s disposal which could be made available, which could tie in the e-Tender portal and the central supplier database into one whole.

Implementing “open contracting” standards as developed by the Open Contracting Partnership would help this process, giving a whole new detailed perspective on how money is spent at the most granular level and strip away places for future corruption to hide. Business should see this as an opportunity, not a threat, and facilitate the process with government. NGOs and civil society could then peruse and scrutinise their own areas — say health or education spending — to call out and report suspicious activities.

MPs also need greater assistance. Parliamentary committees have increasingly become roving investigation bodies jumping from issue to issue with minimal support. The parliamentary budget office needs to be boosted to rival the intellectual capacity and workload of the congressional budget office in the US.  It has about 235 employees, which is nearly half the number of senators and congressmen. The South African budget office only seems to have 10 staff and a vacant director position from its website,  to service 490 parliamentarians. A beefed-up office would provide MPs the tools for greater investigative and digging capacity.

A higher efficacy of public spending driven by crowd-sourced transparency, facilitated through a more capable state without cadre deployment, could be two simple building blocks coming together to accelerate so many other things the state needs to be doing better, from land reform to economic policy to education to health.

SA needs to avoid a loss of perspective that state capture and the Zondo Commission can immediately provide to spur change.

•  Attard Montalto is head of Capital Markets Research at Intellidex.

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