South Africa

Abstract

The chapter examines the mechanisms, actors, enablers, and institutional environment that have facilitated capital flight from South Africa and the attendant accumulation of offshore private wealth. It describes how capital flight has accelerated during the modern era of economic liberalization and rapid integration into the global economy. It highlights the systematic failure of the country’s regulatory system, which has been compromised by “state capture” orchestrated by an intricate network of private enablers with deep connections within the government and the global economy. It illustrates this phenomenon with the story of the Gupta family, which built its fortune by forging connections with key figures in government and parastatal companies in the mining and energy sectors and used a complex network of opaque transactions to move money out of the country. The chapter then discusses the adverse effects of capital flight on economic development, state institutions, and governance.