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THE ONSLAUGHT ON LADY JUSTICE

01/09/2021 08:16:00 Sanele Sibiya

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My mind shudders when I look at the current assault on lady justice with impunity.

Honestly, the current attack on lady justice speaks magnitudes on the strength of our institutions, which are requisite for economic growth and sustainable growth. Business relies on the legal systems to mediate contracts, settle disputes, enforce the regulatory environment for smooth operation of business.

Refresher

We awakened to news of the arrest of MPs, only to have their urgent bail applications treated as a non-urgent matter. The state barrister, who received a hefty sum to assist the crown build a case, found that the state has no case against the incarcerated members of parliament. Albeit the fact that the documents and the communiqué were leaked and is now in the public domain, the DPP continues to handle the case as though the public is not aware of all these facts. All this is happening enface a silent Human Rights Commission. These are major indicators that our justice system is highly captured and one wonders if at all the system will be able to play its role in catalysing economic growth in the country.

The budget

Tabling his budget for the FY2021/22 the finance minister made undertakings to finance the legal framework through making contingencies to hire more judges, setup a revenue tribunal and improve efficiencies within the industrial court so it was better equipped to deal with the backlog of cases. The rationale for all these investments is critical enablers to economic growth. We all applauded this allocation of resources as it was vital for economic growth, the investment in our institutions is vital for economic growth.

Role of justice on economic growth

The rule of law is critical to economic growth of any country, this a fact well contained in a huge body of knowledge on growth theories. Economic growth depends on many factors. Key among those factors is adherence to the rule of law and protection of property rights and contractual rights by a country’s government so that markets can work effectively and efficiently. Laws must be clear, public, fair, enforced, and equally applicable to all members of society. Property rights are the rights of individuals and firms to own property and use it as they see fit.

The economic impacts

The economics impacts of a captured justice system are grave effects on the economic growth of the country. A captured system only tends to respond to the needs of those who have captured the system and the concerns of fairness and justice tend to be thrown out the window. Business tends to farewell in fair systems compared to a system in which one needs to appease the capturer in order to succeed. This becomes more worrying when the courts would be required to mediate between business transactions of those that have captured the system and another party who experts an impartial judiciary to rule on the issue. The impacts are grave on foreign direct investment and attracting international capital flows into the country.

Empirical evidence

Panel data for 114 developing countries from 1970 to 2007 to demonstrate that developing countries with common law legal systems attract greater foreign direct investment (FDI) than countries that have civil law or Islamic legal systems because common law systems are more inclined to promote the rule of law and protect property rights and can be understood to provide more efficiency in the law, better contract enforcement, more judicial autonomy, and more market-oriented regulations, (Lee, H et als. 2014). The evident capture of the justice system is counterproductive and we have a system that remains incapable of producing market oriented outcomes if that goes against the wishes of those that have captured the institutions.

Adverse selection on FDI

The obtaining legal systems tend to determine what kind of FDI and capital the country will be able to attract. Evidence from the globe shows that countries with poor legal systems tend to attract investors with questionable business acumen and questionable business practices. Companies that rely on well-functioning legal systems tend not to choose to invest in countries with poor justice system. Countries with poor justice systems tend to be characterised with a lot of rent seeking behaviour, that is, there often exist pressure to keep certain business practices on going even if they are not productive anymore, but rather because of certain interested parties. These tends to distort growth and the growth outcomes of a country. Countries with poor legal systems tend to be stuck with businesses that rely on lobbying and playing politics beyond just the basic networking. These arrangements are at best exploitative and tend to impact adversely on the poor.

Stop the rape on lady justice

I have done my level best to give an economic insight on why the current onslaught on lady justice needs to end. We need functioning legal systems and ancillary institutions to attract the requisite FDI and ensure smooth functioning of the economy and well defined property rights and patents. All of which are requisite components for economic growth.