The price of violence: R145-billion
The costs include expenditure on security, justice and health rather than on productive efforts, investment is driven away and psychological effects results in lower productivity
Businesses lose billions of rands every year because of the high crime rate in the country. Violence costs South Africa about 13% of its gross domestic product (GDP), according to the Global Peace Index for 2020 by the Institute for Economics and Peace (IEP), an independent nonprofit global research institute that analyses the links between business, peace and economic development.
The Global Peace Index has also shown that the effect of violence on the global economy in 2019 amounted to $14.5-trillion in constant purchasing power parity terms. This is equivalent to 10.6% of the global GDP or $1 909 a person.
In 2019, the economic effect of violence globally has improved for the second year in a row, decreasing by 0.2%, or $29-billion, as a result of a decline in armed conflict in the Middle East and North Africa. There was also a substantial reduction in the economic effect of terrorism, globally which fell by 48% from 2018 to 2019.
The economic effect of violence in South Africa stood at $145.3-billion. Despite this improvement, the country is still plagued by various problems, in particular high levels of homicide and violent crime.
“Violence and the fear of violence create significant economic disruptions. Violent incidents generate costs in the form of property damage, physical injury or psychological trauma. Fear of violence also alters economic behaviour, primarily by changing investment and consumption patterns.”
To calculate these numbers, the
IEP focuses on internal security expenditure, which consists of police services, law courts, prisons, and other national public safety expenditures. Expenditure on preventing and dealing with the consequences of violence divert public and private resources away from productive activities and towards protective measures.
It further said that the direct costs associated with violence include the immediate consequences for the victims, perpetrators and public systems including health, judicial and public safety. The indirect cost of violence refers to longer-term costs such as psychological harm and the effect of violence on the perception of safety and security in society.
In addition, violence results in economic losses in the form of productivity shortfalls, foregone earnings and distorted expenditure.
Although this might seem like just numbers this week, the bank BNP Paribas Group South Africa and its subsidiary company RCS released a study saying that violence has longlasting effects on people, which impairs their productivity at work. The inaugural research surveyed more than 100 respondents living in South African “crime hot spots” such as Eldorado Park in Gauteng and areas on the Cape Flats such as Mitchells Plain.
It found that 81% of respondents said they or a family member or colleague had been late for work as a result of violence or crime, while 72% reported having missed work altogether.
Vikas Khandelwal, head of territory for BNP Paribas South Africa, said corporations need to bolster peace efforts, not only to assist employees but to alleviate the negative effect on productivity and to support a thriving economy.
Khandelwal said for this to be done there needs to be a deeper understanding of the complex and deeprooted challenges facing people.
The most recent police crime statistics, for second quarter of 2020, show that offences such as commercial crimes have increased by 2.2% from 21 518 in the same quarter last year. But, shoplifting decreased by 9.1% from 15 192 in the same period in 2019.
And although the pandemic forced many companies to close earlier this year, there has been an uptick in crimes on commercial premises.
There were 123 murder cases and 214 attempted murder cases reported nationally in the second quarter at business premises, including malls, restaurants, workplaces, office parks and entertainment centres.
The highest number of these cases were in Gauteng, followed by Kwazulu-natal. The North West had a lower number of cases, while the Free State, Mpumalanga and Northern Cape had none.