SA corruption costs R27bn annually and 76 000 jobs

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CAPE TOWN. Minister Ebrahim Patel adresses the select committee on economic development in the old assembly chamber in parliament 15 Feb 2011.Pic:Trevor Samson

Corruption costs the SA gross domestic product (GDP) at least R27bn annually as well as the loss of 76 000 jobs that would otherwise have been created, according to Minister of Economic Development Ebrahim Patel.

  This is according to a recent exercise by his department to quantify the cost of corruption in the public sector, based on just a 10% increase in price in infrastructure projects as a result of corruption.

Collusion increases the costs of doing business, stunts the dynamism and competitiveness that is needed and has a negative impact on growth and jobs, Patel said at the Competition Law, Economics and Policy Conference at the Gordon Institute of Business Science.

The culture of “rampant acquisition” is spreading so widely that the professional standards of integrity which are a hallmark of functioning institutions are under enormous pressure. There are some troubling matters to address in looking at corruption and the collusion therewith by professional firms, from auditors to lawyers and others.”

A World Bank study on competition in SA noted, for instance, that in the case of four cartels in maize, wheat, poultry and pharmaceuticals – products which make up 15.6% of the consumption basket of the poorest 10% – conservative estimates indicate that around 200 000 people stood to be lifted above the poverty line by tackling cartel overcharges.