21/06/2018 06:03 BST | Updated 21/06/2018 06:03 BST

Mcebisi Jonas: The State Has Lost Its Legitimacy

The former deputy finance minister says state capture has hollowed out the state, but it is not the only problem.

Bloomberg via Getty Images
Mcebisi Jonas.

The deployment of "enablers" of state capture has hollowed out the state, and the state has lost its legitimacy to lead society, former finance minister Mcebisi Jonas says. In a speech delivered at the Motlanthe Foundation inclusive growth conference, published by Business Day, Jonas says a "trust-based" model of governance must be implemented by the state.

Jonas was fired as deputy finance minister during a controversial Cabinet reshuffle in 2017. He was appointed as a special investment envoy by President Cyril Ramaphosa in April.

But he said state capture is not the only problem facing the state, and dismantling it will not necessarily fix South Africa's problems. But it has created the environment for bad governance to thrive, he said.

"State capture has fatally weakened the state, reduced business and investor confidence, caused policy uncertainty and undermined state legitimacy. However, these damaging consequences are symptoms of the contradictions and structural weaknesses in our political economy.

Dismantling state capture will not necessarily address these issues but will create the conditions under which they can be tackled and fundamental change effected."

Jonas said that state capture predates 2009.

"Though the genesis of state capture predates 2009, the past decade has set back our efforts to restructure and transform the economy. For a few decades, South African growth closely tracked world GDP, but since 2010 it has lagged the rest of the world and is worsening. In the past four years, SA has fallen from the second-biggest recipient of foreign direct investment in Africa to the sixth-biggest. Business confidence has drifted down and at the end of 2017 was at its lowest point in 16 years. The banking sector reported a marked decline in the uptake of credit over the course of 2017. Fixed investment in SA is a fraction of what it is in other developing markets such as China."

Jonas warned against populists and high levels of social discontent. He said populists have repeated the narrative that the Constitution is an obstacle to transformation.

"Populists not only provide ideological alternatives within the democratic system, they reject the democratic system itself. In our context, rising youth unemployment and increased social discontent have fed the growth of populism both within and outside the ANC, together with a developing narrative that our constitutional provisions, a free media and an independent judiciary were constraints to transformation.

While our institutions of democratic accountability acted as a bulwark against state capture, high levels of social discontent remain."

He warned that factionalism in the ANC around competing economic interests will remain an obstacle to turning the country around, and said only a trust-based model of economic governance can fix the situation.

"The ANC remains highly fractured around competing patronage interests, with these contestations continuing to find expression in state governance and functionality. This undermines the legitimacy required to lead society and negates its potential role as the modern prince leading the transition to a more just and equal society.

Without a new vision of where we are going, without a trust-based model of economic governance and the necessary coherence, coordinating capacity and accountability, our new consensus will be stillborn."