A decade of corruption under Jacob Zuma is likely to have cost South Africa more than R500bn, President Cyril Ramaphosa said on Monday.
As he sought to reassure investors that sweeping reforms would revive the economy and bring perpetrators to account, Mr Ramaphosa warned that the impact of years of graft under Mr Zuma, his predecessor, was even greater than previously thought.
“It was much bigger than I think most people could ever have imagined,” Mr Ramaphosa told the FT Africa Summit in London. “[The cost] runs way beyond, in my view, more than 500 billion. Some people have even suggested that it could be a trillion rand.”
The R500bn ($34bn) sum is about a tenth of South Africa’s gross domestic product.
Analysts have estimated that under Mr Zuma, Africa’s most industrialised nation lost between R1tn and R1.5tn in missing tax revenues and a lack of foreign investment in addition to the direct costs of graft.
The patterns of corruption that developed under the former president, widely described as “state-capture”, brought critical institutions including the revenue service and the state power monopoly Eskom, to the brink of collapse.
Those responsible would now be held to account, Mr Ramaphosa told the audience of investors, business leaders and senior African politicians. “I am more confident than I have been in the past that our prosecuting agents, in putting together everything they need to do, will definitely be going after those who are complicit in criminal activity,” he said. “Be they in the country or outside of the country, they will follow them up.”
Last week Mr Ramaphosa’s anti-graft fight received a boost when the US government imposed sanctions on the Guptas, the business family at the centre of graft allegations against Mr Zuma.
The Guptas were “members of a significant corruption network” that diverted government resources to their businesses, the US government said. The family and Mr Zuma deny wrongdoing.
Mr Ramaphosa, the former anti-apartheid leader turned businessman who served as Mr Zuma’s deputy for four years, took office in February 2018 promising to confront graft and rebuild the economy. Some 20 months later, many South Africans have criticised the president for moving too slowly, but Mr Ramaphosa sought to assure the audience that results were expected soon.
“In the last year and a few months, we’ve made tremendous progress in turning our country around,” Mr Ramaphosa said. “We have stemmed that bleeding [and] we are now ready to open a new chapter.”
At Eskom, which was responsible for severe nationwide blackouts this year, the government was poised to overhaul the executive management, strengthen the board and address the company’s spiralling debt, Mr Ramaphosa said.
“We are going to be making announcements of how we are going to deal with that debt in a few days,” he said, adding that observers, including the rating agency Moody’s, would be “happy” with the changes.
Moody’s is the only one of the top-three rating companies that has not downgraded the country’s sovereign debt status to junk. It has maintained South Africa at investment grade — Baa3 with a stable outlook — but is expected to review that status this month.
As the government seeks to raise revenues and stabilise the economy, it is also expected to invite new investment into other struggling state-owned enterprises, including South African Airways. Mr Ramaphosa said the government was already in discussion with “interested parties” about becoming a strategic equity partner in the airline.
Though the economic challenges facing the country are stark, the president wants to draw a line under the past.
“There is an army of South Africans who want South Africa to do good, who want South Africa to go back to embracing the practices and values that Nelson Mandela stood for,” he said, referring to the country’s revered former leader.
“In that regard, I stand on the shoulders of many South Africans as I work with others to lead our country down the good path.”
Additional reporting by Joseph Cotterill in Johannesburg