What is corruption

We are all affected

Corruption affects us all

Corruption affects us all. It threatens sustainable economic development, ethical values and justice; it destabilises our society and endangers the rule of law. It undermines the institutions and values of our democracy. But because public policies and public resources are largely beneficial to poor people, it is they who suffer the harmful effects of corruption most grievously.

To be dependent on the government for housing, healthcare, education, security and welfare, makes the poor most vulnerable to corruption since it stalls service delivery. Delays in infrastructure development, poor building quality and layers of additional costs are all consequences of corruption.

Many acts of corruption deprive our citizens of their constitutional and their human rights.

Economic implications

Corruption and international perceptions of corruption in South Africa has been damaging to the country’s reputation and has created obstacles to local and foreign direct investment, flows to the stock market, global competitiveness, economic growth and has ultimately distorted the development and upliftment of our people.

Public money is for government services and projects. Taxes collected, bonds issued, income from government investments and other means of financing government expenditure are meant for social grants, education, hospitals, roads, the supply of power and water and to ensure the personal security of our citizens.

Corruption and bad management practices eat into the nation’s wealth, channelling money away from such projects and the very people most dependent on government for support.

Countless studies around the world show how corruption can interrupt investment, restrict trade, reduce economic growth and distort the facts and figures associated with government expenditure. But the most alarming studies are the ones directly linking corruption in certain countries to increasing levels of poverty and income inequality.

Because corruption creates fiscal distortions and redirects money allocated to income grants, eligibility for housing or pensions and weakens service delivery, it is usually the poor who suffer most. Income inequality has increased in most countries experiencing high levels of corruption.

The need for good governance

Adherence to good governance creates an environment where corruption struggles to flourish. Failure to adhere to the practices of good governance means stakeholders increasingly demand accountability. Mass action and strikes are organised in protest as citizens begin to lose faith in the ability or willingness of their elected officials. Political instability increases. Investment declines. The sale of shares by investors decreases the value and rating of companies. Their regulators can deny them licences, a stock exchange listing or the ability to sell products and services. Other organisations refuse to do business with them. And donors or economic organisations grant fewer loans or aid to nations whose governance is murky.

Key principles of good governance include:

  • Honesty – Organisations are the sum of their parts. Employees and managers who operate in good faith, with integrity and no conflicts of interest, will underpin the governance cornerstone of honesty and elicit trust from stakeholders.
  • Transparency – Decisions made, action taken and how it is reported to stakeholders must be communicated clearly and made easily available for those affected by the organisation.
  • Responsiveness – Listening to stakeholders, taking action or reporting transparently should be done within a reasonable time of a request, complaint or concern.
  • Management independent of governing bodies – There must be a separation of powers and chain of accountability. Friends and family members, or suspected conflicts of interests cannot overlap between layers of management and directors, boards or senior politicians. Independence ensures better judgement, assessment of risk and optimum performance.
  • Rule of law – Institutions must comply with the laws, codes, guidelines and regulations of the nations in which they operate.
  • Effectiveness and efficiency – Good governance is also delivering to mandates, meeting the needs of stakeholders, curtailing expenditure, streamlining decision-making and action, and making the best use of available resources.
  • Fairness – Good governance entrenches the principle of fairness, and treating stakeholders equally.
  • Just – Justice and governance concerns the moral responsibility and integrity of individuals within an organisation and the behaviour of the organisation itself.
  • Accountability – Ensuring that public and private institutions, corporations and individuals entrusted with public resources and civil society are held to account, means they are answerable to their stakeholders.