State capture is not finished in South Africa

State capture is alive and well in South Africa in the form of civil servants, who have captured a significant share of the country’s tax revenue and economic output. 

Coupled with the rise of tenderpreneurs and well-connected political elite profiteering off commercial deals with the state, the government cannot say state capture is a thing of the past. 

While many point to state capture at a high level, with episodes such as Nenegate or the Gupta’s influencing appointments within the state and public companies, Efficient Group chief economist Dawie Roodt said the reality is more banal. 

Speaking at the BizNews conference, Roodt said a major problem for South Africa’s financial accounts is the state’s huge wage bill. 

With this bill consuming a large share of state spending without enhanced service delivery, it has become a drain on the South African economy. 

Roodt also noted that the public sector is the source of much of the so-called ‘petty’ state capture, which occurs in the form of corruption at a low-level, whether it be the selling of passports or bribery at a roadblock. 

“There is something that I am very concerned about. The real state capture in South Africa is the civil service and tenderpreneurs,” Roodt said. 

“The individuals within the civil service are completely overpaid. Not all of them, but the large majority are totally and completely overpaid.”

Roodt explained that civil servants over the past 15 years have received increases well above the rate of inflation, with many being pushed into higher income brackets. 

This has resulted in South Africa having a bloated public sector wage bill, with the structure being top-heavy with regard to salary levels. 

The National Treasury has worked hard to limit increases and make the public workforce younger and relatively cheaper to employ. However, much of the damage has been done. 

Furthermore, the Treasury’s calculations in the Budget often exclude employees of state-owned enterprises (SOEs) such as Eskom, which suffer from their own bloated workforces. 

Public sector wage bill disaster

The issue is not necessarily with how much South Africa’s civil servants get paid, but that their increases have not come with a corresponding rise in productivity. 

Service delivery has plummeted in South Africa over the past 15 years, and corruption within the public sector has surged, despite civil servants earning more than ever. 

This has created a serious financial problem for the government, as it is politically unpopular to limit wage increases and potentially cut jobs, despite the public sector wage bill being a significant burden on the fiscus. 

“Civil servants will get an increase over the next three years of 4.4% per annum. Significantly compounding the problem,” Roodt said. 

“The reason for this is the government’s close ties with Cosatu, which is part of the Tripartite Alliance, and, of course, they want their members to get paid more.”

The ANC’s close relationship with trade unions makes it incredibly difficult for the party to be seen cutting jobs, limiting worker benefits, or curtailing salary increases. 

“I have done some calculations. The average civil servant in South Africa is paid more than R50,000 per month,” Roodt said. 

“There are 1.2 million civil servants in South Africa, excluding SOEs and local authorities. At an average salary of R50,000, this makes up a third of state expenditure.”

“As a percentage of GDP, those civil servants in the national government get – they do not earn – approximately 13% of the economy. 13% of South Africa’s economic output is used to pay only civil servants in the national government.” 

As a result, South Africa’s public sector wage bill is the third largest in the world relative to the size of its economy, despite service delivery being among the worst.

The problem is only made worse when expanding the analysis to provincial government employees, as they spent R451 billion on employee compensation in the most recent financial year for which data is available. 

This means the provincial wage bill accounted for 64% of total provincial government expenditure, as this spending item continues to grow above inflation year after year.

Towards the end of 2025, Stats SA revealed that provincial government expenditure amounted to R704 billion. Two-thirds was made up by employee compensation and 25% by purchases of goods and services. 

In the employee compensation category, civil servants working in education constituted the highest share of spending, with pre-primary and primary education leading the pack at 26.6%.

In 2014/2015, employee compensation amounted to R271 billion. A decade later, in 2023/24, it rose to R451 billion in 2023/2024. This equates to an annual growth rate of 5.8%.