Counting the Cost of Crime

Text size +-

The slaying of a high-profile businessman in a Johannesburg suburb last week has once again focused attention on crime and corruption in South Africa. It has also left many analysts wondering just how much crime is costing the country as it struggles to deal with its violent international image.

Bret Kebble was, until recently, considered to be one of the stars of South Africa's post-Apartheid economic success story. As chief executive of the Randgold and Exploration Company of South Africa, Kebble held a stake in the largest undeveloped gold deposits in the country, a shaft known as South Deep. He was also chief executive of two other closely linked companies, JCI Ltd and Western Areas Ltd.

Kebble, who was white, had powerful political connections, with close ties to the African National Congress (ANC) and was a champion of the black empowerment programme. His businesses were often held up as examples of how black empowerment could be implemented in a way that could benefit South Africa's economy as a whole

He was shot dead at the wheel of his silver Mercedes Benz while driving through Melrose North. Police investigators say there is no reason to suspect that this was anything more than an attempted carjacking at this time. But rumours abound that the murder was connected to a growing scandal surrounding Kebble's business empire.

The entrepreneur had recently been forced to resign as CE of Randgold and Exploration, JCI and Western Areas after allegations of murky dealings involving millions of dollars worth of missing stocks and claims that he had misled investors.

Whatever the case, however, crime is clearly a major factor affecting business and economic life in South Africa.

While the World Bank recently ranked South Africa as the 28th best place to do business out of 155 countries, its analysis did not take into account crime rates. Instead it looked at factors such as labour regulation, tax administration and compliance, contract enforcement and court efficiency, licensing, laws associated with starting and closing a business, corporate governance, and protection of investors.

Meanwhile, recent heists on security vans, casinos and shopping malls have further stymied the efforts of South African officials to reverse the country's "Wild West image.

There has recently been a spate of attacks on security vans by gangs of AK-47 toting bandits. Major motorways are popular venues because their heavy traffic leads to huge jams that delay the police. The gangs use convoys of stolen cars to trap the target and then, using portable power generators and electric saws, they cut vans open and scoop up the cash.

In September there were several headline-grabbing raids, including a smash and grab at a casino at Sunrise, and five criminals wearing burqas cleaned out a jeweller in a Johannesburg mall. What is particularly disturbing is the level of violence used.

There has been no attempt to undertake a comprehensive national costing of crime in South Africa. The damage crime inflicts upon the economy, in terms of lost foreign direct investment and tourism revenue, is impossible to quantify.

The damage to property and lost business, however, is somewhat easier to measure. For example, gangs have hit over 50 shopping malls in Gauteng alone this year, costing the retail industry over R70m ($10.72m) in stolen merchandise. The last census of the farming industry, carried out by Statistics SA in 2002, calculated that crime costs South Africa's commercial farming industry roughly R1.2bn ($115m) a year - over a quarter of their total annual losses.

Yet despite these headline-grabbing attacks, official crime statistics show a significant fall in violent and non-violent crime in recent months. The South African Police Service's (SAPS) annual crime report, released in September, states that murders dropped another 5% from 2004 to 2005 and that murders are down by 40% since 1995. Johannesburg General Hospital is also reporting an encouraging drop in gunshot victims admitted.

Indeed, some crime experts believe that the increasing sophistication of the criminal gangs is a response to SAPS's heightened efforts to tackle crime. The force is growing in numbers of officers, resources and expertise.

Unfortunately, this news has done little to undermine South Africa's reputation for car-jackings, murder and armed robbery. South Africa still remains one of the most dangerous countries in the world, with a murder rate of 42.7 per 100,000 people in 2003/4, according to the ISS.

The boosted SAPS has not made South Africans feel any safer either. A recent survey by the ISS found that although crime had significantly decreased since 1998, public perceptions of their personal safety in 2004 were 100% worse than in 1998.

Cracking perceptions and realities when it comes to crime is enormously difficult - cities such as New York, for example, have still not entirely lost their violent image, despite years of dramatically falling crime rates. Yet South Africa's businesses sorely need some help here, if they are to break out of a damaging spiral.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart

Read Next:

In South Africa

South Africa: Unsecured loans weigh on banking sector

Bankers have been quick to downplay weak results from one of South Africa’s largest providers of unsecured loans, saying the decline in profits at African Bank Investments Limited (ABIL) does not...


Exploring the future of sustainable aquaculture in emerging markets

With per capita fish consumption having doubled in the past six decades, aquaculture is becoming more important in combatting food insecurity. Recent innovations seek to improve sustainability and...