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SA’s growth relies on its institutions, but the Simelane case suggests the President doesn’t care

Professor Balthazar
By Professor Balthazar
8 Dec 2024
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How can voters be expected to have confidence in the constitutional enterprise when the very institutions which are supposed to promote it are treated almost in a cavalier fashion?

This column has previously made reference to the pioneering work of Nobel Prize winners James Robinson, Simon Johnson and Daron Acemoglu. In essence, their work has demonstrated the importance of public institutions for a country’s growth and prosperity.

Countries with a poor record in respect of the rule of law and institutions that appear to be designed not so much to enhance the welfare of the population, but to exploit the population do not generate growth or any form of meaningful transformative change.  

The work that these economists have undertaken over many years compellingly shows the critical role of institutions. But in South Africa, where so much effort was expended to ensure a constitutional framework which would promote the rule of law and ensure accountable, open and transparent institutions, it is almost as if this debate is only considered in its omission.

The sharp point is that key institutions which were designed to enhance the prosperity of those most in need do exactly the opposite. Take, for example, the recent engagement in Parliament with representatives of the National Student Financial Aid Scheme (NSFAS).

Read more: After the Bell: The odd relevance to South Africa of the 2024 Nobel Economics Prize

Example 1: NSFAS


According to its own web page, NSFAS is mandated to be “a model public entity operating within the public post-school and education ecosystem that provides equitable access to financial and other resources for eligible students in an efficient, transparent and professional student-centric manner”.

Its core purpose is to provide access to higher education and training for students from poor and working-class backgrounds who would otherwise not be able to study and therefore fulfil their innate talents. 

In the 2024 academic year, NSFAS received a budgetary allocation of R53.6-billion for but one financial year. It is congenitally unable to ensure that this huge sum of taxpayer money is used for its purpose.

For example, a few days ago, NSFAS finally submitted a long overdue 2022/2023 annual report to Parliament. This delay in itself reflects upon its profound organisational deficiencies, including the dissolution of the board, an inability to submit annual reports to Parliament and the need to place the entity under administration.

If that was not bad enough, the Auditor-General noted that almost R60-billion has been incurred in irregular expenditure between 2019/2020 and 2022/2023.

Parliament was told that the existing IT infrastructure was inefficient and outdated, that NSFAS struggled to handle the volume of applications and transactions and there were manifest cases of inaccurate and incomplete data and delays and generally a deluge of administrative problems.

Read more: As NSFAS finally submits its 2022/23 annual report, AG flags R60bn in irregular spending over four years

NSFAS was designed to be an institution which would promote equity in tertiary education and thus ensure that tertiary education was not simply the privilege of those who command the necessary financial resources. But it has failed ignominiously.

It represents the exact antithesis of the kind of transparent accountable institution which Acermoglu and his colleagues regard as central to inclusive, sustained development.

In the same week, shocking quarterly economic figures that the economy had declined by 0.3% were reported, confirming the parlous economic status of the country to cope with addressing poverty, employment and inequality.

Example 2: Thembi Simelane


To confirm the failure to grasp the importance of institutions, the President for the umpteenth time revealed that institutions of integrity are not central to governmental policy.

Thembi Simelane was until this week the Minister of Justice and Constitutional Development. While South Africa seeks to be removed from the grey list, on 26 August 2024, the South African public learnt that Simelane had received a “loan” of R575,600 from Gundo Wealth Solutions, a company directly linked to the unlawful investments of municipal funds into VBS Mutual Bank.

Summoned to explain to Parliament, Simelane appeared to have escaped by way of the vaguest of narratives, which hardly answered the sustained and detailed allegations made against her, particularly in a series of detailed articles from News24’s Kyle Cowan and Daily Maverick’s Pauli van Wyk.

For example, on 10 October 2024, these two journalists exposed the fact that Simelane had misled Parliament about the “loan” she received. The President was finally constrained to request a report from his minister as to the ongoings of VBS and her purported loan.

More than three months had elapsed since that request and the public was none the wiser until suddenly on 3 December, when the President removed her from the Ministry of Justice and redeployed her as Minister of Human Settlements.   

That of itself is hardly illustrative of a deep-seated commitment to accountable institutions, including an executive that is transparent and accountable and which comports itself with the utmost integrity. To the contrary, a minister under a cloud is removed from one important portfolio, Justice, to another, Human Settlements.

Read more: Thembi Simelane’s unexplained cash (Part Three) — The mystery cash used to pay back R849K for VBS-linked loan

The homeless may well complain that they have now been saddled with this minister in circumstances where the legal profession was fortunate to get a replacement. 

The point is that, at the very least, the President should have suspended Simelane following the credible evidence that had been provided to determine with clarity whether these reports were sufficiently credible to justify her removal. For three months he sat on a report provided by Simelane.

All we now know is somehow she is no longer suitable for Justice, but perfectly suitable for Human Settlements. That is not the way to promote the idea of a government that is committed to the kind of model which will promote inclusive development.

SA’s fraught future


These are two examples of the core failure of the present system of governance in South Africa. There are many others.

The National Prosecuting Authority, which presumably could have and may still (in the distant future?) charge Simelane, continues to battle to persuade the public that South Africa has a prosecution authority which will hold accountable to the rule of law the key players who almost destroyed this country through State Capture.

While there have been improvements with regard to the conduct and performance of the Judicial Service Commission, the jury remains out as to whether that body is appropriate for its mandated tasks.

These examples must invariably raise significant concerns about the viability of constitutional democracy in South Africa. The future is fraught.

At the last election, some 27% of the electorate voted for parties that wish the Constitution to be abolished or significantly altered. There is simply no guarantee that this model of governance has enduring possibilities, particularly when institutions which are its guardrails are so weak.

What, for example, is a poor student to think of the huge amounts of irregular expenditure and the inefficiencies in NSFAS, the very incompetence of which jeopardises that student’s future?

How can such a person be expected to have confidence in the constitutional enterprise when the very institutions which are supposed to promote it are treated almost in a cavalier fashion, which is illustrated by the record of NSFAS and the attitude of the President to ministers who at the very least are under a very significant cloud of suspicion?

Institutions matter, but many in this country, including, it appears, the President, do not care. That is a recipe for governance disaster. DM

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