Skip to content

The Effect of Corruption on Poverty

Literature › Works

Hoffman, Paul (2012). The Effect of Corruption on Poverty. Paper presented at 'Towards Carnegie III' conference, University of Cape Town, 3-7 September 2012. University of Cape Town (Carnegie III conference).
Type conference paper
Scope Post-1994 South African economy
Method policy analysis
Period studied 1994–2012
Regions South Africa
Themes transition post apartheid, inequality poverty unemployment, politics ideology elections, macro fiscal finance debt
Citation key hoffman2012

Argument

Hoffman argues that public-sector corruption is 'theft from the poor' and a major obstacle to tackling South Africa's 'triple threats' of poverty, inequality and unemployment. Corruption diverts state resources, such as an estimated R30 billion a year lost on state tenders, that could fund poverty alleviation. The paper is a legal and policy argument that draws on Constitutional Court judgments (Glenister, Grootboom) and secondary commentary. It criticises replacing the Scorpions with the Hawks inside SAPS and the National Development Plan's multi-agency approach. It recommends an independent Chapter Nine Anti-Corruption Commission, constituency representation, press freedom, better schooling, job creation and land reform. The apartheid past appears only as background, in the claim that poverty is its legacy, and in a brief mention of the late-apartheid 'lifeboat' bank bailout.

Evidence and method

Secondary and journalistic sources: Bhorat and van der Westhuizen's IDASA Democracy Index chapter, Holden and Plaut's 'Who Rules South Africa?', SAIRR and Cronje commentary, ANC policy conference documents, and Constitutional Court judgments (Glenister 2011, Grootboom 2001, Soobramoney). It also cites the PRECCA definition of corruption and a World Bank definition of poverty. No original data or archives.

Findings

  • Hoffman reframes public-sector corruption as theft from the poor because it diverts resources. (p. 3)

    it is perhaps more appropriate to define corruption in the public sector more simplistically as “theft from the poor”.

  • Education failure is cited as perpetuating the apartheid legacy and entrenching unemployment. (p. 2)

    Only about 1 in 28 Black African learners emerge from school functionally literate.

  • Black economic empowerment is said not to have benefited the poor. (p. 1-2)

    They have tended to empower those least previously disadvantaged at the expense of the poor, whose lot in life has remained materially unchanged after the end of the apartheid era.

  • He cites an estimate of annual losses to tender corruption. (p. 9)

    about R30 billion per annum is lost to corruption on state tenders

  • He reports Bhorat and van der Westhuizen's finding that post-apartheid growth favoured the top of the distribution and that race-based inequality drives overall inequality. (p. 5)

    income inequality between racial groups – to all intents and purposes between Africans and whites – is driving this overall increase in inequality.

  • The paper reports a sharp decline in Hawks performance after 2009. (p. 12)

    On the Hawks watch (since 2009) the number of new investigations has fallen by 85%, while the value of contraband seized plummeted by a staggering 99.1%.

  • The welfare system's fiscal sustainability is questioned given the narrow tax base. (p. 17)

    Grants aimed at the alleviation of poverty now reach some 13,5 million people in South Africa, including non citizens who are permanent resident of the country.

  • Hoffman links anti-corruption and anti-poverty efforts, arguing that eliminating tender fraud would free resources. (p. 18)

    Even if only tender fraud and corruption are eliminated, this would free up R30 billion a year to be spent on more worthy causes

  • The paper notes an inquiry into late-apartheid corruption through the bank 'lifeboat' operation. (p. 10)

    The Office of the Public Protector is investigating the CIEX report into corruption in the dying days of apartheid