During the Zuma era the focus shifted to the procurement spend of the SOEs as the primary vehicle for building a black industrial class. This had two consequences. Firstly, it reinforced a questionable assumption that capital-intensive investments in large-scale infrastructure lead to the type of growth and development that is needed. Capital-intensive investments, however, have a poor rand-to-job ratio. Secondly, it prepared the way for state capture as the shadow-state networks came to broker the deal-making process.
It is clear that what is needed during the post-Zuma era is an investment-led, job- and livelihood-creating growth strategy that is focused on the building of an inclusive and sustainable economy. What this means in practice needs to be carefully worked out in the course of 2018 and beyond.
It may well entail fiscal expansion beyond what National Treasury has traditionally been comfortable with, and it may require the Reserve Bank to go beyond a narrow focus on inflation when it comes to setting monetary policy. If high interest payments can be offset by the benefits of accelerated and more inclusive growth, a more equitable economy may well be affordable in the medium term. However, everything will depend on whether it will be possible to clean up state administration, re-establish the SOEs as viable public corporations and discipline the private sector, which is focused on short-term capital gains and mechanisms for accelerated investments outside South Africa.
Notes and references
1Bhorat, H, M Buthelezi, I Chipkin, S Duma, L Mondi, C Peter, M Qobo, M Swilling & H Friedenstein. 2017. Betrayal of the Promise: How South Africa Is Being Stolen. Johannesburg: Public Affairs Research Institute.
2The Right2Know Campaign is a movement that campaigns for freedom of expression and access to information in South Africa. See http://www.r2k.org.za/about/.
3Ministerial Review Commission on Intelligence. 2008. ‘Intelligence in a constitutional democracy’. Available at: cdn.mg.co.za/uploads/final-report-september-2008-615.pdf.
4Black First Land First defines itself as ‘a pan-Africanist and revolutionary socialist political party in South Africa’. See https://blf.org.za/.
5Republic of South Africa. 1996. The Constitution of the Republic of South Africa: Section 217 (1), (2). Pretoria: Republic of South Africa.
6Public Protector South Africa. 2016. State of Capture. Available at: http://cdn.24.co.za/files/Cms/General/d/4666/3f63a8b78d2b495d88f10ed060997f76.pdf.
7Available at: www.iol.co.za/news/special-features/the-zuma-era/nzimande-dismayed-by-looted-40bn-10300509.
8Available at: https://www.news24.com/SouthAfrica/Politics/Political-hyenas-in-feeding-frenzy-20100826.
10The appointment of a Judicial Commission of Inquiry into State Capture was announced by Jacob Zuma in January 2018, following a lengthy legal process challenging the recommendations of the public protector that such a commission should be established. See https://www.timeslive.co.za/politics/2018-01-09-zuma-appoints-commission-of-inquiry-into-state-capture/; https://www.timeslive.co.za/politics/2018-01-25-in-full-state-capture-inquiry-to-probe-guptas-zuma-and-ministers/.
11Department of Economic Development. 2011. The New Growth Path. Pretoria: Department of Economic Development; National Planning Commission. 2012. National Development Plan 2030: Our future – make it work. Available at: http://www.gov.za/sites/www.gov.za/files/Executive%20Summary-NDP%202030%20-%20Our%20future%20-%20make%20it%20work.pdf.
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Structuring the Capture of the State
The nexus between the constitutional and shadow states depends on the integration of a range of skills similar to those present in most international corporations. The composition of the Zuma-centred power elite is, in many respects, highly organised, following the structure of what, in academic terms, is called a ‘war economy’.1 In a war economy the ‘shadow state’ establishes a number of informal structures which produce systems of ‘profit, power and protection’2 that, in turn, serve to further their operations, making possible continued preferential access to resources and power through an exploitative economic system. The cycle can, therefore, continue.
One of the key requirements in establishing these shadow structures is the ability to secure a system of command and control over the way the resources are accessed, moved and distributed. At the outset, control must be established over the sources of extraction, including the ability to respond flexibly to any changes in the operating environment.3 Once access to the source of extraction is secured, networks of middlemen or brokers must be established that can move resources externally, usually transnationally, to sustain loyalty (this is critical to ensuring the survival of the network). The ability to transact within this network is facilitated by establishing political marketplaces where support is traded through the provision of access to resources.
The skills of this patronage network are localised within a number of groups. The networks consist of three elements: the controllers, the elites and the entrepreneurs (also known as brokers), as shown in Figure 1.1.
The controllers, or patrons, of resources sit at the apex and are usually the strongmen directly responsible for predation and exploitation. Their function is to secure access to and maintain control over resources.4 A patron or controller typically favours one group over another (or others), resulting in the exclusion of those who are out of favour. This sets up a competitive set of nodes around the patron or controller, which has the ultimate effect of rendering elites (the next layer down) unable to cooperate effectively as they fear being ousted by their partners, or falling out of favour with the patron. Jacob Zuma and the Guptas have been controllers.
Figure 1.1. Generalised model of a patronage network that extracts and administers rents
The elites are responsible for establishing and maintaining patronage networks, which facilitate the distribution of benefits. In the South African context the elites would be such players as Free State premier Ace Magashule, ministers Faith Muthambi, Malusi Gigaba and Mosebenzi Zwane, Eskom’s Anoj Singh and the ubiquitous Brian Molefe.
The