“POST-TRUTH,” “ALTERNATIVE FACTS” AND
South African companies are accused of hoarding proﬁts to accumulate large amounts of “idle”
cash, as well as of being the perpetrators of massive illegal capital ﬂight. This paper argues that
much of the claimed corporate cash is either offshore or belongs to banks. It reminds that bank
deposits increase when companies borrow, not when they retain proﬁts. It shows, too, that meas-
ures of massive capital ﬂight actually reﬂect data errors. Exaggerating, through faulty methodol-
ogy the extent to which companies have cash or may be involved in illegal capital ﬂight is
unhelpful. It exacerbates already-fraught government-business relations, and complicates the
search for solutions to South Africa’s economic problems.
JEL Classiﬁcation: A11, D25, E51, F32
Keywords: Corporate cash holdings, capital ﬂight, trade misinvoicing
My career as an economist has taken me to three very different environments. So, I
thought it would be helpful in this address to reﬂect on what my time in a government
policy agency, in business and most recently in higher education, has taught me about
the practice of economic policy formulation and the value of economic research.
In all three spaces, I have been called upon to produce economic evaluations of possible
policy choices. For much of my career these were relatively isolated issues. But there was a
time when I was close to national policy debates, and I consider myself very fortunate that
a large part of my business career coincided with South Africa’s transition to democracy.
This transition required not just reaching a democratic political settlement, but also the
search for a new economic path, and policies that would address the gross inequalities and
injustices of our divisive and hurtful apartheid past. I was exposed to these fascinating
exchanges through my own work, but mainly in support of senior business leaders.
While there were large ideological differences, pre-1994 relations between business,
the ANC and its labour alliance partner COSATU were mostly quite cordial. There is
little doubt that relations between business and the ANC government have soured since
1994. Governing is always a difﬁcult challenge, and the fact that so much of the last 23
years has been characterised by the slow pace of economic transformation, disappoint-
ingly low growth, limited job creation and poor service delivery has resulted in mutual
* Corresponding author: Associate Professor, Economics and Economic History, Rhodes Uni-
versity, Grahamstown, Eastern Cape, South Africa. E-mail: email@example.com
Economics and Economic History, Rhodes University
Presidential Address at the 2017 Biennial Conference of the Economic Society of South
Africa, Rhodes University, Grahamstown.
2018 Economic Society of South Africa. doi: 10.1111/saje.12181
South African Journal of Economics Vol. 86:1 March 2018
South African Journal