A new report by the World Bank puts the cost of crime on South Africa’s economy at around 10% of the country’s GDP yearly.
The report titled “Safety First: The Economic Cost of Crime in South Africa” x-rayed the economic impact of crime on South Africa.
The report states,
- “The impact of crime is estimated to be at least 10% of GDP per year, comprising transfer, protection, and opportunity costs.”
The World Bank noted that the crime rate in South Africa is one of the highest in the world and recent trends put the country among the top three among Google searches for crime together with the United States and the United Kingdom.
It stated,
- “Violent crime is especially high: South Africa is consistently among the five countries with the highest homicide rates, with 41.9 intentional homicides per 100,000 people in 2021.”
- “Its homicide rate is over six times the average for upper-middle-income countries and nearly 16 times that for high-income countries.”
Cost of crime on South Africa’s economy
The report explained that resources spent on public protection constitute a high tax and put a constraint on those that should have been channelled to other sectors that lead to growth due to the high crime rate.
It further explained that businesses face higher operating costs due to the high crime and it could decrease the country’s growth potential by about 1%.
It stated,
- “Businesses are severely affected by crime. They face higher operating costs from their losses due to crime and spending on security and insurance.”
- “If businesses alone could invest some of the amount they spend on security in productive ventures instead, South Africa’s growth potential could increase by about 1 percentage point.”
How to reduce crime
Also, the World Bank explained that crime undermines the public sector, reduces household disposable income, and has a multi-dimensional impact on inclusive growth and job creation.
On what it will take to address crime, the bank recommended interventions across multiple sectors as the causes of crime are multidimensional.
These include more effective detection and sanctions to increase the cost of committing crime; regulatory reforms to decrease its benefits; and broader economic and social policies.
