A crime against business is a crime against all South Africans
Increasing crime against businesses affects costs, motivation and is a brake on investment and expansion, says Dr Johan Burger at the Institute for Security Studies
The official SA Police Service (SAPS) crime statistics for the 2011/12 financial year were generally positive, but had some bad news for the business sector, with a substantial 8.8% increase in robberies at business premises when compared to last year. A robbery is recorded when armed groups attack a business premises and threaten managers, employees and customers with violence in order to steal from them.
This differs to burglaries where thieves break into a premises while it is closed and no violence is threatened. Worryingly, business robberies have been increasing at an alarming rate since 2004/05 when 3 320 cases were reported to the police compared with the 15 951 cases reported in 2011/12. This is a dramatic increase of 342% over the past seven years
The increase comes after promising signs that business robberies were starting to stabilize. Between the last two financial years ending 2010/2011, the rate of increase dropped to 0,9%. Last year it looked as if the crime was shifting from larger businesses to smaller and medium sized enterprises. The Consumer Goods Council revealed that robberies amongst its members had decreased by 50% from 282 incidents in2008/09 to 139 incidents in 200/10.
According to the ADCORP Employment Index for February 2012, about 68% of all South African workers are employed by businesses with less than 50 workers with 43% of the national workforce employed by businesses with less than five people. In 2001 around 250,000 people started their own businesses, whereas in 2011 only 58,000 did so, a substantial decline of 76%. If the small business sector can be revived it can, according to the ADCORP Index, lead to the creation of more than five million new job opportunities. It is therefore worrying that in the past five years 440,000 small businesses were closed down and the number of new business start-ups has fallen to an all-time low. The additional burden of being targeted by armed criminal groups has only made matters worse.
However, the most recent Consumer Good Council figures for 2011/12 show that in the past financial year, these attacks increased by 9% to 153 incidents, causing an average 2% increase in total financial loss to these businesses compared with the previous year.
There is some research that reveals the impact of crime, or the fear of crime, on businesses growth and development. Although the recent Grant Thornton International Business Report (IBR) released in July 2012, shows that crimes against larger businesses have dropped substantially since 2007, when 80% of those surveyed had experience some crime, the most recent report shows that still almost half (46%) of private businesses have been negatively affected by crime in the last 12 months.
In the IBR survey, 52% of business executives said the increased cost of security was their biggest burden, 21% said crime and security issues resulted in decreased motivation, and 19% indicated that it led to decreased productivity. As many as 72% of the executives said that the high crime rate was the biggest factor prompting them to emigrate. A study by the Small Business Project (SBP) into the impact of crime on small black owned businesses in 2008 revealed that around 30% would not expand their businesses because of the fear that it would increase their becoming a target of crime.
Fortunately, it's not all bad news for business. The police report continuing downward trends for both bank robberies and cash-in-transit (CIT) robberies. Bank robberies have been decreasing since 2007/08 when 144 incidents were recorded. The recent statistics show that this crime dropped to 35 incidents in 2011/12, the lowest level since 1994.
This is quite an achievement considering that in 1996/97 there were 561 bank robberies reported in South Africa. Similarly, cash-in-transit robberies have also dropped by 43% compared to the previous year with 166 incidents being recorded in 2011/12. This is also the lowest number of incidents since 1994.
Bombings of cash machines (ATMs) remain a concern. In 2007/08 this phenomenon reached its peak when 431 machines were blown open with explosives. In the following two years it decreased by 42% to 247 incidents in 2009/10, before increasing again by more than 60% to 399 incidents in 2010/11. During 2011/12 this crime again decreased by 34,6% to 261 incidents. Given the erratic trend in this crime over the past few years, we will have to wait for next years statistics before it can be stated that this reduction is sustainable.
Not unlike violent and property related crimes, high levels of commercial crime and corruption poses a serious risk to both the South African business community and the national economy. The broad category "commercial crime", includes all kinds of corruption, fraud, money laundering, embezzlement, forgery and so forth, has increased by a substantial 63% since 2004/05. This year is the first time in over half a decade that a decrease has been recorded from 88 388 reported cases in 2010/11 to 88 050 in 2011/12. Both the public and private sectors are notoriously bad at reporting these crimes to the police and the actual incidence of fraud is generally understood to be far greater than that recorded in the official crime statistics. The small decrease of 0,4% in this year's statistics therefore could be as a result of reporting rather than due to an actual decrease in this crime type.
According to South Africa's Public Protector, Advocate Thuli Madonsela, corruption has become endemic in this country, both in the public and private sector. Speaking at an international conference in Stellenbosch in April this year, she said that we are at a ‘tipping point' in our fight against corruption and failing to deal with it decisively may seriously distort our economy and even derail our democracy.
The head of the Special Investigating Unit (SIU), Willie Hofmeyer, in a briefing during October 2011 to a parliamentary committee expressed concern about the extent of the problem when he informed the committee that between R25 billion and R30 billion of government's annual procurement budget alone was lost to corruption.
It is no wonder that South Africa dropped 10 places in the annual Transparency International Corruption Perception Index for 2011 where we were ranked 64th out of 183 countries. This is our worst ranking since the index started in 1997 and should ring alarm bells.
There is a perception that businesses can absorb the impact of crime more easily than individuals or families. This is not only false, but also dangerous. Businesses of all sizes are what put food on our tables, keep our transport systems running, and provide goods, services and entertainment from television and sport to haircuts and furniture. They are the engine of the economy, the route to job creation, and the potential antidote to poverty. Crime against business affects us all. ENDS
Dr Johan Burger is a senior researcher in the Crime and Justice Programme at the Institute for Security Studies (ISS). For more analysis of the SAPS crime statistics for 2011/12, please visit www.issafrica.org/crimehub. The ISS Crime and Justice Hub is supported by the Hanns Seidel Foundation."
This article first appeared in Business Day.
Click here to sign up to receive our free daily headline email newsletter
