Parallel economy is bleeding our nation dry
THERE is a joke that originates from India, told to Alan Beattie, author of The False Economy.
A chief minister of an impoverished Indian state goes on an exchange visit to an American city where the mayor, a wily old machine politician, shows him around.
First, the mayor points out a highway on the edge of the town. "See that?" he says. He taps his breast pocket and winks. "Ten percent". Then he points to a new baseball stadium. "See that? Ten percent". Finally he takes him under the portico of a grandiose city hall. "See that? Ten percent".
On a return visit to India the chief minister takes him up to his official residence, high on the hill overlooking the state capital. He makes a sweeping gesture over the city, taking in the miserable slums, the open sewers, the potholed roads, the abandoned factories. "See that?" he says. He taps his pocket and winks. "One hundred percent".
The moral of the joke is that some types of corruption work - up to a point - and some don't.
Indonesia under Suharto's corrupt dictatorship was relatively successful because corruption became a system with its own rules to which all corrupt politicians and businessmen subscribed.
The politicians and businessmen knew they didn't have to kill the goose, so they charged businessmen bribes that would still allow companies to deliver required services. It was like a tax. And whenever some state organs became corrupt beyond the point which Suharto deemed acceptable, he would disband them and form new ones that would invariably be equally corrupt.
His corruption lasted up to a point. The 1997 financial crisis that hit Asia was partly blamed on an unsustainable, corrupt system that prevailed over much of Asia, including Indonesia. His regime, run by the state political party, Golkar - responsible for deploying comrades - collapsed.
Tanzania, on the other hand, was ruled by Julius Nyerere. He was an honest governor and his nationalisation policies didn't allow corruption. He had no rules to enforce an efficiently corrupt system. But corrupt politicians, bureaucrats and businessmen created a parallel profit-driven economy outside Nyerere's control. His policies proved fruitless.
And so a parallel economy smoothed by bribes rather than taxes directed at the fiscus thrived. By the end of his rule, Nyerere declared: "I have failed".
South Africa is no doubt crafting its own model of corruption. No one has openly formulated a policy of corruption. But it is happening. Fast. Anecdotal evidence suggests that this type of corruption, if not curbed, could spark a violent revolution.
The rise of service delivery protests is an indication that delivery is not happening despite billions being budgeted for and allegedly "spent" on service delivery. Almost every year, the Auditor General's reports to Parliament have become a catalogue of "wasteful" and "irregular" expenditure. In some cases, the auditor-general is unable to audit the books of certain departments and state entities because there are no books to audit.
In such cases, the "100 percent" takers have destroyed the evidence. Tenders issued for the delivery of goods and services are rigged as a matter of necessity. Honest businesspeople are a nuisance. Laws governing prudent use of taxpayers' money are an inconvenience. And officials see nothing wrong in procuring services from companies that don't have a tax registration number.
The crass informalisation of the government's supply chain systems only benefits the "100percent" takers. It's a parallel economy established by powerful politicians and business people.
Like the Indian chief minister, it seems some top officials are pocketing "100 percent" of the funds meant to benefit the poor. This rate has resulted in government being charged in some instances more than double the normal price of bottled water and bread.
In the Eastern Cape, for example, the school feeding scheme, learner transport system and stationary provision have collapsed due to what appears to be the "100 percent" syndrome.
In Limpopo, ANC Youth League President Julius Malema and his friends are implementing a pilot project aimed at perfecting the "100 percent" model. Once successful, there will be no reason not to roll it out.
The emergence of this model explains why the billions of budget allocated by the ministers of finance every February don't make a dent on poverty. Every year they table the budget, promising to deliver services.
While this happens, the rich are devising means to extract "100 percent" from the budget allocations. That is why there is a gap between allocations and delivery. This gap is at the heart of public discontent. The discontent is not directed at the private sector but at the government for failing to make efficient use of taxes collected from the private sector.
Some of the threats to nationalise the private sector could be aimed at extracting bribes from businessmen prepared to do anything to stop the madness.
If every cent of taxpayers' money is spent as it should be, there will be no room for "10 percent", let alone "100 percent". Service delivery protests are a call to close the "delivery gap".
However, each time there is a delivery crisis in a municipality, the poor are told that the government will budget for billions to solve the problem.
It is almost as if gigantic figures are thrown around to obscure the gap caused by the "100 percent" syndrome. Now, imagine corrupt politicians surveying failed projects like collapsed toilets and incomplete classrooms, and promising to rehabilitate them.
What do they whisper to their friends? Ten percent? One hundred percent? Five percent?
100% on the take
Parallel economy is bleeding our nation dry
THERE is a joke that originates from India, told to Alan Beattie, author of The False Economy.
A chief minister of an impoverished Indian state goes on an exchange visit to an American city where the mayor, a wily old machine politician, shows him around.
First, the mayor points out a highway on the edge of the town. "See that?" he says. He taps his breast pocket and winks. "Ten percent". Then he points to a new baseball stadium. "See that? Ten percent". Finally he takes him under the portico of a grandiose city hall. "See that? Ten percent".
On a return visit to India the chief minister takes him up to his official residence, high on the hill overlooking the state capital. He makes a sweeping gesture over the city, taking in the miserable slums, the open sewers, the potholed roads, the abandoned factories. "See that?" he says. He taps his pocket and winks. "One hundred percent".
The moral of the joke is that some types of corruption work - up to a point - and some don't.
Indonesia under Suharto's corrupt dictatorship was relatively successful because corruption became a system with its own rules to which all corrupt politicians and businessmen subscribed.
The politicians and businessmen knew they didn't have to kill the goose, so they charged businessmen bribes that would still allow companies to deliver required services. It was like a tax. And whenever some state organs became corrupt beyond the point which Suharto deemed acceptable, he would disband them and form new ones that would invariably be equally corrupt.
His corruption lasted up to a point. The 1997 financial crisis that hit Asia was partly blamed on an unsustainable, corrupt system that prevailed over much of Asia, including Indonesia. His regime, run by the state political party, Golkar - responsible for deploying comrades - collapsed.
Tanzania, on the other hand, was ruled by Julius Nyerere. He was an honest governor and his nationalisation policies didn't allow corruption. He had no rules to enforce an efficiently corrupt system. But corrupt politicians, bureaucrats and businessmen created a parallel profit-driven economy outside Nyerere's control. His policies proved fruitless.
And so a parallel economy smoothed by bribes rather than taxes directed at the fiscus thrived. By the end of his rule, Nyerere declared: "I have failed".
South Africa is no doubt crafting its own model of corruption. No one has openly formulated a policy of corruption. But it is happening. Fast. Anecdotal evidence suggests that this type of corruption, if not curbed, could spark a violent revolution.
The rise of service delivery protests is an indication that delivery is not happening despite billions being budgeted for and allegedly "spent" on service delivery. Almost every year, the Auditor General's reports to Parliament have become a catalogue of "wasteful" and "irregular" expenditure. In some cases, the auditor-general is unable to audit the books of certain departments and state entities because there are no books to audit.
In such cases, the "100 percent" takers have destroyed the evidence. Tenders issued for the delivery of goods and services are rigged as a matter of necessity. Honest businesspeople are a nuisance. Laws governing prudent use of taxpayers' money are an inconvenience. And officials see nothing wrong in procuring services from companies that don't have a tax registration number.
The crass informalisation of the government's supply chain systems only benefits the "100percent" takers. It's a parallel economy established by powerful politicians and business people.
Like the Indian chief minister, it seems some top officials are pocketing "100 percent" of the funds meant to benefit the poor. This rate has resulted in government being charged in some instances more than double the normal price of bottled water and bread.
In the Eastern Cape, for example, the school feeding scheme, learner transport system and stationary provision have collapsed due to what appears to be the "100 percent" syndrome.
In Limpopo, ANC Youth League President Julius Malema and his friends are implementing a pilot project aimed at perfecting the "100 percent" model. Once successful, there will be no reason not to roll it out.
The emergence of this model explains why the billions of budget allocated by the ministers of finance every February don't make a dent on poverty. Every year they table the budget, promising to deliver services.
While this happens, the rich are devising means to extract "100 percent" from the budget allocations. That is why there is a gap between allocations and delivery. This gap is at the heart of public discontent. The discontent is not directed at the private sector but at the government for failing to make efficient use of taxes collected from the private sector.
Some of the threats to nationalise the private sector could be aimed at extracting bribes from businessmen prepared to do anything to stop the madness.
If every cent of taxpayers' money is spent as it should be, there will be no room for "10 percent", let alone "100 percent". Service delivery protests are a call to close the "delivery gap".
However, each time there is a delivery crisis in a municipality, the poor are told that the government will budget for billions to solve the problem.
It is almost as if gigantic figures are thrown around to obscure the gap caused by the "100 percent" syndrome. Now, imagine corrupt politicians surveying failed projects like collapsed toilets and incomplete classrooms, and promising to rehabilitate them.
What do they whisper to their friends? Ten percent? One hundred percent? Five percent?
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