South African Treasury Warns Self-Enrichment Culture Eroding State

(Bloomberg) -- A culture of self-enrichment among some South African politicians and public servants is putting the country's democracy at risk and undermining efforts to better the lives of the poor, according to the top officials at the National Treasury and tax agency.

While the right to vote has been extended to all racial groups since the African National Congress won the first post-apartheid elections in 1994, the social architecture formed during White-minority rule has maintained South Africa's position as the world's most unequal society. The richest 10% of the population own more than 85% of household wealth, while the provision of electricity, water, housing and other services to poor urban and rural communities has been marred by the misuse of state funds and shoddy workmanship. 

Public servants and politicians need to get off their “high horse and do what we have to do to ensure we create access and a conducive environment for peoples' lives to change,” Dondo Mogajane, the Treasury's director-general, said Thursday during a discussion about the national budget. “If that's not going to be a motivating factor, we can start calling South Africa a failing state because the things that define a failing state are beginning to show, where we don't care about the poor and improving their lives.”

While the ANC has formally adopted five blueprints to boost economic growth and job creation, efforts to usher in policy changes have been stalled by powerful vested interests. That's left the economy stuck in its longest downward cycle since World War II and more than a third of the workforce unemployed.

Discontent with economic and job prospects and coronavirus restrictions fueled unrest in Africa's most-industrialized economy and contributed to deadly riots and looting in the two most populous provinces in July last year. In response, President Cyril Ramaphosa reinstated a 350-rand ($23) temporary monthly stipend for the poor that was initially introduced in 2020 to cushion them from the fallout of the pandemic. The grant was subsequently extended until March 2023. 

The measure added about 10.3 million people to the welfare net, meaning that almost half of the population of 60 million currently receive at least one social grant. Fewer than 15 million individuals out of a working-age population of 40 million are registered taxpayers and those earning more than 1 million rand a year pay almost 40% of all personal income as levies. Civil-rights groups and academics have been calling for a permanent basic income grant.

The prevailing environment isn't conducive to creating jobs and means the government has had to expand the welfare net to “compensate for the lack of giving people dignified, honest work,” South African Revenue Service Commissioner Edward Kieswetter said at the same event. The country is fast moving toward an environment, where things work in spite of the government, and not because of the government, he added.

“We have too many leaders with a sense of self-importance, as opposed to knowing that they are here to serve,” Kieswetter said. “Until and unless we have those honest conversations, we will more and more lose the promise of our democracy.”

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