‘Stop accepting crime’ – Eskom chair

South Africans have taken to rationalising the country’s high levels of crime, pointing to rampant unemployment and an unequal society. But to do that is to ‘understand what should not be understood’, says Mteto Nyati. It’s part of a broader culture of failing to obey the rules.
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While so many economic lights are now flashing green, the one major hindrance to investment remains as intractable as ever: runaway crime.

Speaking on a recent investment panel discussion, Eskom chair Mteto Nyati argued that South Africans rationalise this, pointing to the 33.5% unemployment rate or our unequal society as an excuse for the crime rate.

“We should stop understanding what should not be understood,” he said. 

This sentiment was followed by the loudest round of applause all day – no mean feat for a conference at which Discovery CEO Adrian Gore interviewed Larry Fink, the founder of the world’s biggest asset manager, BlackRock.

Crime is one of the biggest agenda items for the business sector, which has partnered with government to fix Eskom and Transnet, yielding solid results, including a stretch of more than 200 days without power blackouts. 

But crime is another story: in the six months to June, 12,734 people were murdered – about 70 people per day. That rate of nearly 40 deaths per 100,000 people per year puts South Africa as one of the 10 worst countries, on a list headed by El Salvador (52 murders/100,000), Jamaica (43.8) and Lesotho (43.5).

Nyati said: “We’ve got a society that tends to accept, that rationalises that there is all this crime.” In this, he echoed the view of Discovery chair Reuel Khoza, who said the time has come for more “decisive action”.

More controversially, Khoza praised the response of police in KwaZulu-Natal, where more than 100 criminal suspects have been killed this year in a series of shootouts with police. 

Khoza said this illustrated the value of “not compromising” with criminals.

“We’re not saying that people, simply because they’re seen as criminals, their lives are dispensable, but they actually dispense of innocent lives. And unless you are firm-handed in dealing with them, their numbers will proliferate,” he said.

Khoza – who has a history of not pulling punches on government failure – said many of the businesspeople in the audience know all too well of this problem, having themselves been hijacked, or subjected to extortion.  

As chair of Nedbank in 2011, two years into Jacob Zuma’s ruinous presidency, Khoza infuriated the ANC when he spoke of “the emergence of a strange breed of leaders who are determined to undermine the rule of law”.

Zuma’s apparatchiks flew off the handle, none more so than government spokesperson Mzwanele Manyi (now part of Zuma’s MK Party), who accused Khoza of “insulting” the government. Manyi argued that crime is “indeed being brought under control”, and that for Khoza to say otherwise spoke to his “paranoia”.

More than a decade later, it has only got worse. Police minister Senzo Mchunu, speaking at the release of the quarterly crime statistics last month, said that “crime is generally on the increase.”

One of the biggest threats, which Khoza spoke of, is the construction mafia, which began under the guise of “business forums” in Durban in 2015, but escalated into a national epidemic of criminal gangs pitching up at buildings sites and demanding 30% of project revenues for their “protection”. 

Khoza said “when criminals rock up and say ‘give us 30%’,” they must be dealt with properly. In reality, however, many construction firms have simply acceded to these demands, incorporating this into their cost of doing business.

This illustrates why crime is an intensely critical economic issue. 

A year ago, the World Bank said “the impact of crime is estimated to be at least 10% of GDP per year” in South Africa, adding that if businesses “could invest some of the amount they spend on security in productive ventures instead, South Africa’s growth potential could increase by about one percentage point”.

This reduces investment, and hurts industries like tourism. “A Google trend search shows that people in South Africa, the US and the UK have been the most likely to search for the word ‘crime’ in news stories over the past 15 years,” he said.

In this context, Nyati said, the corruption at Eskom – which has already seen scores of people arrested this year – “is not a surprise”, as it mirrors what is happening in broader society. 

Fixing the culture

Outright corruption is one thing, but it doesn’t help when government officials themselves promote breaking the rules; Nyati, speaking to Currency afterwards, cited the case of the municipalities that simply don’t pay their municipal bills. 

By August, municipalities owed Eskom R82.3bn, and the utility has begun to attach bank accounts, including that of the Emfuleni municipality, which covers much of the Vaal Triangle, including Vereeniging, Sebokeng and Vanderbijlpark.

Kgosientsho Ramokgopa said earlier this year that getting municipalities to pay their debts is the “most urgent task confronting us”, since a failure to do so will mean “Eskom will collapse”.

The City of Joburg, which represents 15% of South Africa’s GDP, owed Eskom more than R3.4bn at last count, and has simply refused to pay, despite court orders compelling it to do so.

And politicians have only made this worse. Before the election, Gauteng premier Panyaza Lesufi said: “The people that were owing Eskom for years … All those debts have now been officially scrapped.” 

Lesufi later said this was simply an “error, and referred to debt relief to communities rather than municipalities,” blaming “linguistic errors” from trying to simplify complex government policy for the public.

Goolam Ballim, Standard Bank’s chief economist, said the “political convenience” of the ANC trying to win votes by allowing people to get away with not paying for services has “run its course”.

Now, he said, the ANC having lost its majority, is “scrambling to find a way to put the genie back in the bottle”, and the only way is for Ramaphosa’s administration to show courage and demand bills be paid. 

In the context of South Africa’s wider crime scourge, this might seem like a minor sideshow, but it is the first step to addressing the culture of failing to abide by the rules, at the end of which lie the far more sinister threats of extortion, kidnapping and murder.

Rob Rose

With more than two decades in business journalism and as an author of Steinheist and The Grand Scam, Rob knows his way around a balance sheet. While editor of the Financial Mail for eight years, the title bucked the trend of falling circulation, producing award-winning news.

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