Corruption and growth downgrades consequence of pro-poverty policies – IRR

South Africa's deteriorating ranking in a global corruption index and the International Monetary Fund's (IMF) stark downward revision of the country's economic growth forecast are alarming indicators of our current economic and policy trajectory.

IRR analysis has consistently illustrated how these are not isolated developments, but the inevitable outcomes of entrenched anti-growth, pro-poverty government policies.

Mounting corruption is a direct result of policies that have undermined merit-based competition, economic integrity, and transparency. Foremost among these are Black Economic Empowerment (BEE), race-based preferential procurement, and cadre deployment. These policies, far from advancing equitable growth, have become conduits for endemic corruption. In South Africa, government corruption has flourished under conditions where unnecessarily large government-managed funds are exposed to discretionary use without adequate oversight.

The IMF's downward forecast for South Africa is a stark reminder that the basic tenets of pro-growth policy are not being met.

The South African economy is beset by a crisis in which skilled labour is scarce and productivity is low. The inability of businesses to secure capital, both in terms of financial investments and in fixed asset formation, is stalling economic momentum.

Compounding these issues are infrastructural inadequacies and problematic trade policies, which hinder the reliable transportation of goods and services to markets. Excessive taxation and diminished purchasing power have eroded consumer spending, further inhibiting economic growth.

Says Hermann Pretorius, IRR head of strategic communications: "The convergence of crippling anti-growth forces paints a clear picture: South Africa is mired in a policy death spiral that is intrinsically anti-growth and propagates poverty. The government's current policy framework not only undermines the country’s economic potential but also deepens the hardships faced by its citizens.

"South Africa needs an urgent strategic pivot towards pro-growth policies that encourage investment and entrepreneurial activity as the engine of upward social mobility.”

"South Africans are desperate for policies that create economic opportunities and unleash the potential of our communities.

“Realistically speaking, President Ramaphosa and Minister Godongwana have one more shot at getting things back on track. This month's budget will be critical to the credibility of the ANC.

“The key political question will be whether the ANC can get back to basics on government spending and economic growth and return to the socio-economic successes that delivered the ANC's stupendous achievement of 70% of the vote in 2004.”

Media Contact: Hermann Pretorius IRR Head of Strategic Communications Tel: 079 875 4290 Email: hermann@irr.org.za

Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za

Sinalo Thuku, Tel: 073 932 8506 Email: sinalo@irr.org.za