Category Risk Management

South africa's record-low corruption score sparks economic concerns, says leading Risk Body

06 February 2024 The Institute of Risk Management South Africa (IRMSA)

The Institute of Risk Management South Africa (IRMSA) is concerned at South Africa’s rating in the new Corruption Perceptions Index (CPI) from Transparency International, as it poses an even greater challenge now to the risk response strategies identified in the 2023 IRMSA Risk Report.

Risk treatment plans that are aimed at addressing our already volatile economy and creating an environment that would retain and attract foreign investment, amongst others.

The CPI is the preeminent global indicator of public sector corruption and South Africa’s score of 41 – our lowest ever and well below the global average – has led to its categorisation as a “flawed democracy”. This is, unfortunately, in support with the scenario analysis that IRMSA also reported on in the IRMSA Risk Report.

“Corruption is a core issue underlying multiple risks in South Africa, including economic collapse, crumbling infrastructure and poor service delivery” says IRMSA Chief Risk Advisor Christopher Palm. “It appears frequently throughout IRMSA’s 2023 Risk Report as an essential risk to tackle before we can begin repairing South Africa’s poly-crisis. Our CPI score is another warning sign that we’re edging closer to becoming a failed state,” he adds. It puts us in the global spotlight, further deterring foreign investment after our concerning grey listing by the Financial Action Task Force last year.”

The CPI report notes that while the government has put measures in place to tackle corruption across state entities – including the establishment of the National Anti-Corruption Advisory Council (NACAC) – South Africa’s score in this year’s report still dropped by two places from 43 since 2022’s report was released.

According to Palm, accountability and consequence management are key to dismantling these systems. “Currently, we aren’t seeing officials being held to account, despite recommendations by the Zondo commission,” he explains. “We need to ensure that officials identified face the music and the National Prosecuting Authority and the Investigating Directorate retain independence from any other organ of state so that these bodies can more effectively do their jobs.”

“It’s clear that we have not put the measures required to arrest our poly-crisis in place fast enough. . “I have heard prominent Chief Risk Officers in the Public and Private sectors refer to a perma-crisis, meaning that the risk profile reported and currently materialising at pace may be here to stay” says Palm. Risk managers need to ensure that they are on the front foot when it comes to tackling corruption within their organisations and dismantling the systemic organisational structures that foster this culture. Part of this, says Palm, is ensuring the protection of whistleblowers and creating a safe space for them to come forward.

Palm also notes that the upcoming elections is an opportunity for South Africans to become active citizens and to vote in strong, visionary and ethical leaders. “Navigating South Africa through this challenging time requires leadership that will hold corrupt officials accountable and recognise that it’s in all our interests to create a more ethical culture to rebuild the South African economy,” he says. “We all have a part to play in tackling corruption whether it’s through active democratic participation or within our organisations,” says Palm. “While tackling corruption seems like a monumental task, it’s more important than ever for us to take action by demanding accountability and fostering a culture of transparency.”

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