Radical economic transformation impossible, state capture real: report

A report by the Public Affairs Research Institute which has focused on state capture has questioned the viability of radical economic transformation, calling the ANC's most recent catch phrase "unachievable in the framework of the South African constitution".

The 72-page report released yesterday, titled "Betrayal of the Promise: How the Nation is Being Stolen", details how the Gupta family through various companies and friends, including President Jacob Zuma, gained beneficial positions to multimillion contracts with state-owned entities (SOEs).

The report likens this to a "silent coup". It details the network of patronage that has allowed the systemic abuse of SOEs such as the Passenger Rail Agency of SA, SAA, Transnet and Eskom, that emerged in Madonsela's report and in media reports.

Procurement spend in these SOEs has increased dramatically over the past decade, an alleged symptom of the abuse.

The research institute dismisses radical economic transformation (RET) as a "a political project to manage the symbiotic relationship between the constitutional and shadow state".

"At the epicentre of the political project mounted by the Zuma-centred power elite is a rhetorical commitment to RET. Unsurprisingly, although the ANC's official policy documents on RET encompass a broad range of interventions that take the National Development Plan as a point of departure, what is emphasised by the Zuma-centred power elite is the role of the SOEs and, in particular, the procurement spend of the SOEs," the report reads.

"Eskom and Transnet are the centrepieces of this strategic focus on SOEs as drivers of RET. This is because Eskom is regarded as key to ensuring the nuclear deal happens, and Transnet, because it is key to ensuring the mining industry is captured and Transnet's properties released to a select group of private companies."

Eskom's procurement spend between 2010 and 2011 accounted for 8.75% (R74-billion) of the government's total spend, while Transnet accounted for 8.3% (R70-billion), by far the most lucrative SOEs and which were targeted extensively.

"Instead of becoming a new economic policy consensus, RET has been turned into an ideological football kicked around by factional political players within the ANC itself and the alliance in general who use the term to mean very different things. RET is used to give ideological legitimacy to what is essentially a political project to manage the symbiotic relationship between the constitutional and shadow state," the report reads.