The Public Service Accountability Monitor (PSAM) notes the tabling of the 2023 Budget Review and Estimates of National Expenditure (ENE) by the Minister of Finance, Enoch Godongwana on 22 February 2023. The following statement reflects on the South African government’s anti-corruption efforts and interventions to bolster municipal governance.
Budget increases to investigative and prosecuting authorities
Foregrounded by President Ramaphosa’s announcement that the Investigative Directorate is to become a permanent entity within the National Prosecuting Authority (NPA), a much-needed move; the PSAM welcomes the addition of R14 billion allocation to key entities tasked with fighting crime and corruption.
Notably, additional support has been provided to address the State Capture Commission recommendations through allocations to the NPA (R1.3 billion), Special Investigating Unit (SIU; R100 million), and the Financial Intelligence Centre (FIC; R256.3 million) over the medium term. This welcome decision seems largely attributable to the threat of grey-listing levelled at South Africa by the Financial Action Task Force (FATF) later this month.
According to Godongwana, this will see the number of prosecutions of state capture, fraud or corruption enrolled in the courts increase from 9 in 2022/23 to 18 in 2025/26. However; given these additional resources, the known extent of corruption and the need to build public trust – the PSAM is concerned about these modest targets. Over coming weeks, we will seek to interrogate the possible reasons for what appears to be a mismatch. The SIU is allocated R100 million over the next 3 years, which is expected to enable it to increase the number of cases enrolled at the Special Tribunal from 35 to 65 over the same period. The Special Tribunal has a statutory mandate to recover public funds siphoned from the fiscus through corruption, fraud and illicit money flows. While this is promising, there is no mention of the R 1 billion owed to the SIU by departments and entities for investigations undertaken in the past few years. It is therefore doubtful whether the additional funding will be sufficient to overcome challenges with the entity’s funding model, which have constrained its ability to function effectively.
Addressing legislative weaknesses in combatting corruption
The increased allocations to the Peace and Security cluster will also assist in addressing the outcomes of the FATF evaluation of South Africa’s legal and institutional frameworks for combatting money laundering and terrorist financing. This is significant given the potential implications of grey-listing should the task force find that South Africa has failed to adequately address money laundering and terrorist financing risks. An International Monetary Fund study estimated that capital inflows typically decline by 7.6% of GDP at the time of a grey-listing, a situation South Africa cannot afford in the current economic climate (although the increased monitoring that would follow could help to illuminate the extent of illicit financial flows, and assist with preventing this from happening, to increase revenue collection of the state).
Reticence on key reforms: NACS and Procurement Bill
We are disappointed that very little was said about two key reforms; the Procurement Bill and the National Anti-Corruption Strategy (NACS), raising doubts about the state’s commitment to urgently tackling corruption to protect the public interest., both of which provide critical public services. The Codex estimated that State Capture cost the country somewhere between R 1 trillion and R 2 trillion, or about 34% of GDP. The implications for the budget, and the ability of the state to deliver public services, and protect human rights enshrined in the constitution should inspire a greater sense of urgency to address weaknesses in the procurement system and embed anti-corruption efforts in every department and entity.
The effectiveness of the justice system requires efficient coordination between these entities. In February 2022, the NPA and SIU appeared before the Standing Committee on Public Accounts, revealing that out of more than 1500 referrals by the SIU, only 41 had been prosecuted. With cautious optimism we acknowledged the promising signs that the SIU and NPA, along with SAPS, SARS and FIC have improved coordination and are seeking to draft MoUs to improve effectiveness.
Municipal governance support for basic service delivery
We note President Rampahosa’s and Minister Godongwana’s pronouncements on policies related to the development of more rigorous support to municipalities for basic service delivery and financial governance. These plans, however, must be provided for in the fiscus in order to give effect to basic human rights. The PSAM will interrogate the extent to which SONA commitments will be fulfilled in the relevant budget allocations. Notable, for instance, is the commitment to municipal debt relief yet to be detailed via National Treasury circulars in March 2023.
Funding, state capability and systemic reform needed
The PSAM welcomes the additional resources for anti-corruption efforts. We’re encouraged by the National Treasury’s steps to allocate resources to these interventions as outlined in Budget 2022 and MTBPS 2022 and we seek to interrogate these more closely. We acknowledge, however, that funding alone cannot resolve the failures of government, across departments and entities, or in the criminal justice system, which itself has been hollowed out by state capture. Radical improvements in state capabilities as envisioned in the National Development Plan are desperately needed.
In addition to calling for the adoption of the Procurement Bill, currently scheduled to be tabled in March 2023; we also call for urgent improvements to transparency regarding procurement, infrastructure projects and contract management. This is central to the prevention, and detection of maladministration, and to enable citizens to hold the state accountable to its obligations. And while the efforts to address weaknesses in legislative and regulatory frameworks identified in the FATF report are notable, we remain concerned about the lack of deeper, systemic reform. Delays in reforming the public procurement and municipal governance spheres will continue to hamper South Africa’s efforts to meaningfully tackle poverty, inequality and unemployment.
ENDS
For media enquiries contact:
Lisa Higginson, PSAM Budget Advocacy Coordinator: lisa.higginson@ru.ac.za / +27 46 603 8885
Zukiswa Kota, Programme Head: z.kota@ru.ac.za / +27 46 603 8826
PSAM Administrator: psam-admin@ru.ac.za / +27 46 603 8358