A shift away from neoliberal economic approaches may be the key to addressing the nation’s ongoing challenges, suggests economist Redge Nkosi.
Nkosi’s comments come as South Africa received a devastating blow to its global perception, with the recently released Corruption Perceptions Index (CPI) ranking the country at an all-time low of 41 out of 100.
Comparatively, full democracies boast an average index score of 73, while flawed democracies average 48, making South Africa’s score well below the global and regional averages.
Corruption is a major threat to any economy, and Nkosi emphasised that the negative perception stemming from the low CPI score is discouraging for both foreign and local investors.
Corruption repels investors
He stated that investors are wary of the impact of corruption on business practices and financial stability and emphasised that corruption creates uncertainty, which further hampers investment.
In today’s global economy, South Africa cannot afford to be associated with such negativity, according to Nkosi.
“There is no doubt that investments are the primary drivers of economic growth, and a negative perception will affect investment attractiveness. South Africa cannot afford to be associated with negativity.
“With this perception, the economy is no doubt expected to perform poorly in the future.”
Corruption does not only damage the economy but also incurs substantial costs.
Resources that could have been directed towards public services and infrastructure often end up diverted for personal gain, exacerbating issues such as unemployment and income inequality.
World Bank, IMF policies favour the elite
Highlighting the importance of state capacity in curbing corruption, Nkosi argued that the government’s ability to operate without compromise is crucial.
He emphasised the need for policies that benefit everyone, rather than just the elite, and are essential for economic growth.
Nkosi criticised neoliberal economic policies promoted by international institutions such as the World Bank and the IMF, arguing that these policies tend to favour the elite and stifle democracy.
He believes that reshaping economic policies to prioritise the broader population’s interests will be crucial for South Africa’s economic recovery.
“Policies need to reflect the will or the demand of the people.”