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28 \ Final Word \ February 2013

protest. That’s a huge section – 5 per cent – of the South African population actively involved in protest to do with service delivery. Huge amounts of studies have been done about this and the thing that always sparks it off, constantly, is corruption. The violence of Marikana needs to be seen in the context of the fact that the police, especially since Zuma’s presidency, have explicitly adopted a militaristic stance.They have adopted a shoot to kill policy. So with delivery protests, they turn violent largely because the police become violent first. There’s been an incredibly brutal response of the police to violence in those communities, and that leads to broader violent protest. South Africa’s credit rating was reduced largely on the back of that violence. That’s a major tangible impact on production. People are angry at corruption; at least with violent protest, it brings credit down. There’s also the very real impact of the diversion of resources away from development. South Africa is not a first world country by any means, but it’s certainly not a poor country, and there’s a huge amount of evidence to suggest that South Africa would be in a much better position from an economic point of view, and not just from a social justice point of view, if funds would be spent in a noncorrupt manner and in the ways they’re supposed to be spent. The best example to my mind is the arms deal. It’s going to cost 70bn Rand when it’s finally paid off [US$7-8bn]. That’s enough to build houses for every single homeless person in South Africa. It’s enough to upgrade South Africa’s entire electricity network. The arms deal is completely unnecessary and wasteful expenditure. It was pursued for corrupt purposes. Corruption has a knock on effect – it’s not just about reallocation of resources and

funds – it diverts resources away from economically productive and socially productive facilities. GTA: What effect does corruption have on mining? Why was Marikana violent? There’s a direct link between corruption and the failing police system, and [the] response to that which is – the police shouldn’t be able to shoot whoever they want, as in the case of Marikana. The police service has become incredibly ineffective because it is so corrupt. I still think that within the mining sector itself the differential between somebody who is a rock driller and the amount of profit the company still generates [is too large]– let’s not beat around the bush here, they’re not going to be making a hundred pounds profit, they’re still making billions and billions pounds profit. And the directors are still getting paid an absolute fortune. The simple reality is that you still have a community of people, [who] despite working for a very profitable industry contributing a huge amount of tax… have a complete lack of basic services. Would a Marikana miner necessarily be demanding 12,000 rand if they knew that they would have cheap running water? These are things that within the budget should be relatively cheap but it’s not cheap for a very particular reason, and that’s corruption. GTA: How is unionisation going to factor in Africa’s prosperity? Unions are very useful in economic terms for a number of things; primarily they provide a centralised bargaining mechanism, which leads to decisions that are collectively enforced. It provides a degree of contract making and discipline as a result. One of the biggest movements against Robert Mugabe has been

“Corruption has a major impact on limiting the willingness of people to engage in longterm investment in bricks and mortar, in developing, and manufacturing for a downstream capacity.” - Paul Holden, writer and anti-corruption investigator

[formation of] the unions. That could only be good for South Africa. The problem [in Marikana] is the bargaining method excludes a union; the point is they’re not actually allowed to enter into a centralised bargaining mechanism at all. GTA: Where does the future lie for SA? Would you invest in SA if you were in business? I would invest in South Africa but I would maybe wait two years, for the elections. Obviously I’m very pessimistic about the state of corruption and about the state of ANC [African National Congress] governance in South Africa. I’m a pessimist about the ANC. I’m incredibly cynical about the ruling class. That doesn’t mean I’m cynical about South Africa. The thing that really was amazing to me the last time I went back to South Africa was the maturity of single discourse on corruption. It’s very clear to me the ANC is losing electoral support rapidly. Now I don’t particularly like the DA [Democratic Alliance], I completely disagree with their economic philosophy. But they will gain more seats and it will cut into the ANC’s majority, and I think that will lead to better governance. Once that transition takes place, then we’ll have a mature democracy.

Gateway to Africa February 2013 is a multi-platform title for businesses looking to take part in expansion opportunities in Sub-Saharan Africa.