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Posted on 2018-08-07 00:00:00
As an organisation whose work is entirely about contributing to job retention and creation, it is disheartening to say the least, and so while we continue to believe that we should be promoting local procurement as an economic driver and means of creating much-needed jobs, we have to look at some of the reasons why we cannot seem to climb out of our slough of despondency.
Corruption, which is a pervasive social evil, has an enormous negative impact on economic growth and job creation.
According to the Minister of Economic Development, Ebrahim Patel, whose department last year undertook an exercise to quantify the real costs of corruption, 76000 jobs were lost and R27billion in monetary terms as a direct consequence of state corruption.
Corruption comes in many guises, including collusion, price fixing and straight forward bribery, involving the payment of a “back hander” to someone who facilitates a deal, or similar.
The net results are as many as the multiple ugly forms corruption takes.
These consequences include over-inflated costs of doing business, which pushes smaller players out of the game; mistrust by investors in a corrupt society, resulting in less foreign direct investment in new manufacturing plants and commercial bases, where the potential for new jobs is lost (International Monetary Fund research shows that even a single point increase in the corruption index can lead to a reduction in foreign direct investment by as much as 8percent) and a government forced to pay more for procurement, leaving them with less money to spend on services.
According to an essay by economics graduate Jason Kelbrick of Nelson Mandela University as a submission to Old Mutual’s 2018 Budget Speech Essay Competition, studies show that countries with higher levels of corruption experience significantly lower government expenditure levels on key economic fundamentals such as health and education. Kelbrick makes the point that corruption in the public sector can increase the cost of services by as much as 30 to 50percent.