Crime costs the economy at least 10% of gross domestic product (GDP) annually, according to the World Bank’s report entitled “Safety First: The Economic Cost of Crime in South Africa”.
According to the report, the costs add up in terms of stolen property, protection costs, which encompass security and insurance, and missed economic opportunities.
The report investigated the economic impact of high crime rates on households, businesses, and the public sector, focusing on economically-motivated crimes.
The study, informed by official statistics from South Africa as well as data recognised in international sources, revealed that real growth in the GDP has been trending downward since the global financial crisis in 2008 and 2009.
"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,“ said Marie Francoise Marie-Nelly, World Bank Country Director for South Africa, eSwatini, Botswana, Lesotho, and Namibia.
Marie-Nelly said the report also revealed the desperate need for South Africa to address structural constraints that had locked the economy in a low growth-low employment trajectory.
With South Africa’s consistent ranking among the top five countries globally for homicide rates, the report stated that addressing this issue was crucial. It also found that domestic organised crime was also increasing, including theft of key infrastructure networks.
The report further highlighted South Africa’s poor economy, which was on a low growth-low employment trajectory with persistent poverty. Socio-economic outcomes have been weak, with high unemployment, poverty, and inequality.
Structural constraints, especially the deepening electricity crisis and transport bottlenecks, have exacerbated these problems, the report found.
Medium-term prospects were weak, with real GDP growth estimated at 0.7% in 2023 and projected to average 1.5% annually over 2024–2026. Unemployment and poverty were projected to remain elevated.
“In this context, confronting the problem of crime and its socio-economic costs is critical,” the report stated.
While the government has put fighting crime at the forefront of its policy priorities, the study underscored 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 prioritised 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,” read the report.