7/6/08

South Africa: Country's Crime Figures 'Are Scaring Off Investors'


Business Day (Johannesburg)
 

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Edward West
Johannesburg

THE reputational damage to SA as a result of the latest crime statistics, including the rise in the business-related crimes such as robbery, would continue to be "huge" in terms of steering investment and business opportunities away, South African Chamber of Business CEO Neren Rau said this week.

He said he knew of many examples where business opportunities had been hurt by the effect of crime on SA's reputation. SA's positive 39th global rating in terms of "ease of doing business" was likely to suffer in the coming year because of the latest crime figures.

Police statistics for April last year to March this year showed that while the murder and assault rate fell slightly, house and business robberies, and car and truck hijackings, increased. Robberies at business premises, especially, rose 44,7% to 9682 from 6689 the year before.

The effect of crime on South African society was all-pervasive and "any estimate we have on the financial costs will have to be an underestimate," said Rau. Indirect effects included examples of businesses such as banks having to raise charges because of the rising cost of security. The cost of this type of effect was impossible to count, said Rau.

Business would remain committed to fighting crime at every level, he said.

Econometrix economist Tony Twine said although there were no exact figures, crime undoubtedly had a negative effect on foreign investment.

"I'm pretty sure the way investment destinations are viewed are built up initially by what the investor sees or hears in the media and this colours their perceptions. This creates a prejudice which most certainly, most judges wouldn't want in their court."

He said SA's main sources of foreign direct investment in the past 20 years were to a large extent the same players who had invested in SA before 1994 and the country was failing to attract "completely fresh investors".

"This view is intuitive and there are of course exceptions. But we can certainly pin part of the blame for that to our reputation as a violent, crime-ridden economy," said Twine.

One initiative by business to combat crime is the South African Banking Risk Information Centre (Sabric), which is primarily funded by the four major banks and has one of its primary activities the prevention of banking related crime.

Sabric's head of violent crime, Kevin Twiname, said its year-on-year statistics from January to June showed ATM bombings had climbed to 277 this year from 182 last year, a rise of 52%.

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Sabric said criminals had targeted almost 700 ATMs since 2004 using commercial explosives, representing about 2,8% of all ATMs. The banking industry was not discouraged and the bombings would not prevent the rolling out of new ATM s to the previously unbanked.

Sabric initiatives included teaming up with the Community Policing Forum to beef up community awareness; patrolling of high-risk locations; making dedicated response teams available; consulting with other stakeholders such as Business Against Crime, the Consumer Goods Council and South African Police Service; and a 24-hour hotline.

Other initiatives being investigated include rendering the cash unusable, should there be an attack.






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