The tragedy of corruption in Africa

South Africa’s energy crisis has virtually swept aside all other contentious issues and has become the preferred topic of discussion in virtually any social or business context. The energy crisis affects almost everyone, some people more than others. As disruptive and outrageous as it is, this latest crisis is the latest of a number of examples of either utter incompetence or corruption at the highest levels of our government. The effect of this incompetence or corruption is that common resources are both underdeveloped and over-exploited to the detriment of almost all South Africans and certainly the South African economy. Why does this happen? Well, if you don’t believe the incompetence argument, the only feasible explanation is the benefit of a small minority of South Africans, the ruling elite and their cronies.

Despite its renewal as the Rainbow Nation with all the promise of a nation transformed almost overnight from a racist society to a multi-cultural society (all without the violence so many anticipated), South Africa has not lived up to its promise. The reasons for this may be complex and seem to lie at the intersection of poverty, crime, black economic empowerment and blatant opportunism (to name a few criteria). At the same time, it would be understandable if the average South African looked at the abysmally low penetration of true broadband (the fact that there was a vigorous debate about what “broadband” between Telkom and the communications regulator, ICASA, is a symptom of a bigger problem) and wondered why, after all these years, the majority of South Africans do not enjoy meaningful Internet access.

For years Telkom enjoyed a State guaranteed monopoly over the country’s telecommunications infrastructure. When the former parastatal listed on the Johannesburg Stock Exchange in 2003 there was much talk about empowering ordinary South Africans through the issue of shares in Telkom to them. There was also an outcry from trade unions about the listing and the negative impact the listing would have on the lower income earners in the country who couldn’t afford basic telephony services. In the time since the listing we have yet to see a concerted effort by Telkom to not only make voice telephony affordable to the people who could benefit the most from this basic and essential service but we have also watched as meaningful broadband access to the Internet remains out of the reach of a significant majority of the population due to a complex and high cost structure. A mere 8% of the population was estimated to have access to the Internet in 2007. This represents roughly 3.85 million South Africans out of a population of around 48 million. Of those people who have access to the Internet, only 650 000 or so users have access to some sort of broadband technology (although there is a dispute as to which of Telkom’s ADSL services are properly regarded as “broadband”).

Telkom has clearly failed to develop its infrastructure to the point where the millions of South Africans without access to broadband, arguably an essential service in today’s information economy, can have meaningful access to the Internet at affordable rates. Instead Telkom continues to keep prices at far beyond comparable prices in developed countries (Telkom has pointed to other developing countries as illustrations of how reasonable its pricing is but this ignores South Africa’s hybrid nature as a developed/developing country) and on terms that only limit access to the Internet through bandwidth caps.

Broadband access to the Internet is necessary if South Africans are to be exposed to the wealth of knowledge and opportunity on the Internet and this is being denied to most South Africans in the interests of profit. In 2007 Telkom earned revenues of roughly R52 billion and an operating profit of roughly R14 billion. Much of this profit went to the government which holds a 38.86% share in Telkom. The lack of any real imperative issued by the government to Telkom to open its broadband network up to a greater number of South Africans suggests that the primary objective with Telkom is greater profits and not true universal access.

Another utility has also been grossly underdeveloped and the result of another example of either gross incompetence or profiteering is the recent and medium term energy crisis in South Africa. In 1998 a white paper was published warning that electricity supplier, Eskom, would not be able to meet increasing demand for electricity beyond 2006/2007 if its infrastructure was not upgraded and capacity increased. The cabinet reviewed proposals for the expansion of Eskom’s capacity and refused to fund these initiatives, ostensibly on the basis that these efforts would just lead to excess capacity. In the last few weeks the shortages anticipated in 1998 have materialised and South Africa has experienced a series of load shedding exercises expected to continue for 5 or more years. In the meantime South Africa is routinely plunged into darkness for hours at a time, major industry brought to a halt and ordinary consumers blamed for the insufficient electricity supply because they have failed to adequately reduce their power consumption. At the same time reports emerge about how Eskom officials have been paid hundreds of millions of Rands while taking no steps to mitigate the emerging energy crisis. Again, profit seems to be the driving force rather than acting in the public benefit. As if to add insult to injury, reports have started to emerge about front companies of the ruling party, the ANC, profiteering off the energy crisis through lucrative contracts to build new power stations and related infrastructure.

The failed telecommunications and energy providers in South Africa are two examples of a number of similar failures to develop and exploit South Africa’s resources for the benefit of the broader population, rather than a tiny minority of well connected opportunists. Unfortunately this trend is not unique to South Africa. Time Magazine reported on a similar tragedy occurring in Angola which has begun to exploit a particularly lucrative oil field and rather than seeing the resulting wealth trickle down to a population accustomed to decades of conflict, the gap between the nouveau riche and the impoverished masses. According to Time, the Angolan government collected $10 billion in revenue from oil in 2005. At the same time more than 70% of the population remained below the poverty line as the newly enriched elite shopped for outrageously expensive baubles. Up north, Nigeria’s rulers stole roughly $400 billion in oil revenues from Nigeria’s coffers between 1960 and 1999 and left two thirds of the population (135 million people) in poverty.

This trend is alarming both because of the extent of the corruption at the highest levels of government and because of the apparent disregard for the need to share these countries’ resources with the broader population, particularly the impoverished and disempowered. While the commons is often thought of in terms of information and content in the context of free culture, it is vital to be mindful of the wide scale and devastating abuses of the more traditional commons in the developing world. The developing world is both an enviable and a tragic region of the world where tremendous opportunity exists to leapfrog the mistakes of the developed world and usher in an era of great prosperity for a population historically abused and exploited for the developed world’s material benefit. Instead what we see occurring again and again are similar abuses by the supposed leaders of these emerging markets.

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