We are all affected by corruption. It jeopardizes long-term economic growth, ethical values, and justice; it destabilizes our society and puts the rule of law in jeopardy. It jeopardizes our democracy’s institutions and values. However, because public policies and resources are generally favorable to the poor, it is the poor who bear the brunt of corruption’s negative consequences.
Being reliant on the government for housing, healthcare, education, security, and welfare puts the poor at risk of corruption because it slows down service delivery. Corruption causes delays in infrastructure construction, poor building quality, and layers of additional costs.
Our citizens’ constitutional and human rights are violated by numerous acts of corruption.
Implications for the economy
Corruption in South Africa, as well as international perceptions of corruption in the country, has harmed the country’s reputation and created barriers to local and foreign direct investment, stock market flows, global competitiveness, and economic growth, all of which have distorted the development and upliftment of our people.
Government services and projects are paid for with public funds. Taxes collected, bonds issued, profits from government investments, and other sources of government funding are used to fund social programs, education, hospitals, roads, power and water supplies, and personal protection for our citizens.
Corruption and poor management practices chip away at the nation’s riches, diverting funds away from programs and the people who are most reliant on government assistance.
Countless studies from throughout the world reveal how corruption can stymie investment, stifle commerce, stifle economic growth, and skew the facts and figures around government spending. The most concerning studies, however, are those that directly correlate rising levels of poverty and income disparity in particular countries.
Because corruption causes fiscal distortions and diverts funds intended for income subsidies, housing or pensions, and impairs service delivery, the poor are disproportionately affected. In most nations with high levels of corruption, income inequality has risen.
The importance of good governance
Good governance provides an environment where corruption has a hard time flourishing. Stakeholders are increasingly demanding responsibility as a result of failure to follow good governance standards. As citizens lose faith in their elected representatives’ abilities or desire, mass action and strikes are organized in protest. Political unrest is on the rise. Investment is dwindling. The sale of shares by investors lowers a company’s valuation and rating. Their regulators have the power to refuse them licenses, stock market listings, and the right to provide goods and services. Other businesses will not do business with them. Donors and economic organizations also give fewer loans or aid to countries with shaky government.
The following are some of the most important principles of good governance:
- Honesty – Businesses are made out of the sum of their constituents. Employees and managers who act in good faith, with integrity, and with no conflicts of interest will support the governance cornerstone of honesty and gain stakeholders’ trust.
- Transparency – Decisions made, actions taken, and how they are reported to stakeholders must all be openly stated and freely accessible to all who are affected by the organization.
Listening to stakeholders, taking action, or reporting publicly should all be done within a reasonable amount of time once a request, complaint, or concern has been received.
There must be a separation of powers and a chain of accountability between management and governing entities. Friends and family members, as well as potential conflicts of interest, are not permitted to cross tiers of management, directors, boards, or prominent politicians. Independence allows for greater judgment, risk assessment, and optimal performance.
Institutions must abide by the laws, norms, rules, and regulations of the countries in which they do business.
Effectiveness and efficiency — Good governance also entails meeting mandates, fulfilling stakeholder requirements, cutting costs, expediting decision-making and action, and making the most of available resources.
Fairness – The notion of fairness and treating all stakeholders equally is ingrained in good governance.
Justice – Justice and governance are concerned with the moral responsibility and integrity of individuals inside a company, as well as the company’s behavior.
Accountability entails holding public and private organizations, organizations and individuals entrusted with public resources, as well as civil society, accountable to their constituents.