South African businesses are routinely praised for their resilience. They have survived electricity disruptions, logistics failures, regulatory uncertainty and the costs of corruption. However, there is something troubling about an economy in which businesses must become increasingly resilient simply to compensate for institutions that fail to perform their basic functions.
At what point does celebrating resilience become an excuse for tolerating poor governance?
This question was particularly relevant as business leaders gathered for the Johannesburg Chamber of Commerce and Industry's annual conference on 28 October to discuss governance, ethical leadership and economic resilience. It also reflects a challenge emerging from Good Governance Africa's (GGA) recent Executive Dialogue Series — businesses cannot build sustainable competitive advantage by adapting indefinitely to institutional failure.
Good governance is not simply a compliance obligation. It is an economic asset. Yet its value depends on more than the conduct of individual companies. It also depends on whether the institutional environment rewards integrity, enables fair competition and holds those who abuse power accountable.
South Africa scored 41 out of 100 on Transparency International's 2025 Corruption Perceptions Index, published in February this year, ranking 81st among 182 countries and territories. Although the index measures perceptions of public sector corruption rather than its actual incidence, it reflects persistent concerns about institutional integrity.
The economic consequences are difficult to isolate but impossible to ignore. Businesses have invested in backup electricity, alternative logistics arrangements, additional security and increasingly elaborate risk management systems. Some investments are prudent responses to ordinary commercial uncertainty. Others compensate for failures in public infrastructure and institutional performance.
Every rand spent managing avoidable institutional risk is a rand unavailable for productive investment. Institutional economist Douglass North has argued that institutions shape economic performance by structuring incentives and reducing uncertainty. Where rules are credible and consistently enforced, businesses transact with greater confidence. Where institutions are unreliable, transaction costs rise.
South Africa's experience of state capture demonstrates how institutional failure imposes costs far beyond the immediate diversion of public resources. The Zondo Commission documented extensive manipulation of public procurement and state-owned enterprises, with consequences for electricity supply, transport infrastructure and institutional credibility. Resilience may keep individual businesses alive but it cannot compensate indefinitely for an economy that systematically undermines their competitiveness.
South Africa has become adept at identifying wrongdoing, commissioning investigations and publishing recommendations. But accountability requires more than exposing corruption. It requires visible consequences, whether through prosecutions, asset recovery or institutional reform.
For business, this distinction matters. Investment confidence depends not only on whether wrongdoing is uncovered but also on whether institutions demonstrate that the rules are enforced. The conventional business case for ethical conduct assumes that companies benefit from doing the right thing. Transparent governance can strengthen trust, reduce risk and support investment. In practice, however, the incentives are not always straightforward.
During GGA’s Executive Dialogue Series, supported by the European Union's Enhancing Accountability Technical Assistance Facility, Dr Max Burger-Scheidlin of the International Chamber of Commerce in Austria introduced an approach known as Corruption Avoidance for Sustainable Competitive Advantage.
His argument highlights an uncomfortable reality. Businesses may recognise that corruption damages the wider economy while believing that refusing to participate places them at a commercial disadvantage.
Consider two companies competing for a public contract. One refuses to offer an illicit payment. The other does not. If the second company wins, the ethical business may lose revenue, market share and potentially jobs. The problem is not necessarily a lack of ethical awareness. It is that the commercial environment has failed to reward integrity.
Political scientists Anna Persson, Bo Rothstein and Jan Teorell describe this as the collective action problem of systemic corruption. Where corruption becomes an expected feature of institutional life, individual actors have limited incentives to behave differently, even when they recognise the collective harm. Anti-corruption strategies that rely exclusively on moral appeals, compliance requirements or individual enforcement actions are therefore unlikely to transform environments in which corrupt behaviour remains commercially advantageous.
However, integrity cannot consistently generate commercial value where political connections determine outcomes and wrongdoing carries few consequences. The challenge is not simply to persuade businesses to behave ethically. It is to create an economy in which integrity is rewarded rather than penalised.
Four years after the State Capture Commission delivered its final report, South Africa continues to confront the gap between identifying institutional failures and implementing reforms capable of preventing their recurrence. At GGA's Executive Dialogue Series, former Chief Justice Raymond Zondo revisited the commission's recommendation for an independent Public Procurement Anti-Corruption Agency.
The proposed institution would strengthen the capacity to detect suspicious procurement patterns and intervene before corruption becomes entrenched. The Public Procurement Act of 2024 provides for a Public Procurement Office within National Treasury, but it does not establish the independent anti-corruption agency envisaged by the Commission.
This distinction matters. Effective procurement oversight is not merely a public administration concern. It is fundamental to fair competition. Domestic institutional reform is essential, but corruption increasingly operates across borders. Illicit financial flows, concealed assets and complex networks of influence can exploit weaknesses between jurisdictions.
GGA's role as Convening Partner for Africa in the movement for a proposed International Anti-Corruption Court reflects the need for stronger accountability mechanisms where national authorities are unwilling or unable to pursue serious corruption involving senior public officials and their collaborators. The proposed Court would complement domestic institutions, reflecting a broader principle — accountability should not end where national enforcement capacity or political will fails.
Government cannot carry this responsibility alone. Business associations, chambers of commerce and industry bodies can establish common standards, support procurement transparency and advocate for credible accountability institutions.
Collective action matters because individual companies may face commercial risks when challenging corruption. A business that refuses an improper payment may lose a contract. An employee who exposes wrongdoing may face retaliation. A supplier that challenges an irregular tender may risk exclusion from future opportunities. These risks cannot always be managed by individual organisations.
Corporate boards must also treat governance as a strategic responsibility rather than a function delegated entirely to compliance officers. Are conflicts of interest managed? Are procurement exceptions investigated? Can employees report wrongdoing safely? Do ethical concerns influence commercial decisions when substantial revenue is at stake?
The relationship between governance and economic opportunity is central to a policy analysis project GGA is supporting with the Nova School of Business and Economics in Portugal, focused on Governance as an Investment Catalyst. The project explores how stronger governance can improve investment readiness and unlock economic opportunities, particularly in South Africa. Its ambition extends beyond policy recommendations towards practical engagement with chambers of commerce and business networks.
South African business has become exceptionally skilled at adapting to institutional failure. But adaptation cannot be our long-term economic strategy. The challenge is to close the distance between exposing wrongdoing and achieving accountability, strengthen institutions capable of enforcing the rules, and translate better governance into greater investment readiness.
These are not separate objectives. They are mutually reinforcing conditions for a competitive economy. Business associations and chambers of commerce have a particular responsibility. They can bring companies together around common standards, advocate for credible procurement oversight, and work with policymakers to remove institutional barriers to investment.
Rather than simply demanding a better business environment, business leaders must help create one. The question is no longer whether good governance makes economic sense. It is whether business is prepared to help create the conditions in which integrity pays.
Dr Ruth Kolevsohn is group executive director for governance programmes at Good Governance Africa and a PhD candidate in the department of psychology at the University of Pretoria.