The impact of crime on South Africa's economic prospects is high and broad-based, according to a World Bank report released today. The report aims to contribute to a better understanding of the impact of crime on South Africa's economic growth.
The research is intended to support the government in the design and implementation of policies to combat and mitigate the costs of crime on the economy and society. This aligns with the government's objectives to initiate reforms aimed at enhancing the fight against crime, as outlined by South Africa's President Cyril Ramaphosa, in the 2023 State of the Nation Address.
The fourteenth edition of the South Africa Economic Update, entitled Safety First: The Economic Cost of Crime in South Africa estimates that crime costs the economy at least 10 percent of Gross Domestic Product (GDP) annually, in terms of stolen property; protection costs - encompassing security and insurance; and missed economic opportunities. The report investigates the economic impact of high crime rates on households, businesses, and the public sector, focusing on economically motivated crimes. The study is informed by official statistics from South Africa, and as well as data recognized in international sources.
"With this new edition of the Economic Update, the World Bank aims to contribute to the policy debate and support the government's action to reduce the incidence of crime, by quantifying its economic impact. This comes at a time when South Africa needs to address structural constraints that have locked the economy in a low growth-low employment trajectory," says Marie Francoise Marie-Nelly, World Bank Country Director for South Africa, Eswatini, Botswana, Lesotho, and Namibia.
The prevalence of crime in South Africa remains a pressing concern, particularly due to high rates of violent offenses. With a consistent ranking among the top five countries globally for homicide rates, addressing this issue is crucial. Domestic organized crime is also increasing, including theft of key infrastructure networks.
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The economy is on a low growth-low employment trajectory, with persistent poverty. Real growth in the gross domestic product (GDP) has been trending downward since the global financial crisis (2008-09), and GDP per capita has contracted on average since 2015. Socioeconomic outcomes have been weak, with high unemployment, poverty, and inequality. Structural constraints, especially the deepening electricity crisis and the transport bottlenecks, have exacerbated these problems. Medium-term prospects are weak, with real GDP growth estimated at 0.7 percent in 2023 and projected to average 1.5 percent annually over 2024-2026. Unemployment and poverty are projected to remain elevated. In this context, confronting the problem of crime and its socioeconomic costs is critical.
Government has put fighting crime at the forefront of its policy priorities. This study underscores the need for multi-faceted actions. Addressing crime is complex and requires long-term efforts, but past experiences in South Africa and abroad suggest that targeted, well-designed, and implemented policies can be prioritized for effective crime reduction over the short and medium term. Such policies and measures include law enforcement measures, regulatory reforms, and targeted violence prevention interventions. These are consistent with the government's current priorities. The report also highlights that sustainably reducing crime requires addressing root causes linked to socioeconomic challenges, including poverty and unemployment.
