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The Impact of Crime on Businesses in South Africa

Crime is devastating, and it is not something that only affects individuals, but it also affects businesses. Crime negatively impacts businesses, and with crime still increasing in the country, it is crucial to understand some of the effects on businesses.

In a study that was conducted, South African owners were asked if they, their staff or their family had been directly affected by any crime in the last 12 months. 65% of them stated that they had been affected. The crimes included anything ranging from hijacking, violent crime, assault or housebreaking, which is extremely disturbing. Though South Africa is known for its high crime statistics, it seems as if these crime rates will continue to rise, with the provinces that are most affected by crime being Gauteng, Kwa-Zulu Natal, Western Cape.

Crime also tends to have direct and indirect costs for businesses. The direct costs of crime on businesses refer to the things that affect money, stolen goods, and the damage that occurs to the property. The indirect costs of crime include temporary closure of the business, loss of equipment necessary to perform tasks, and lost work hours due to the staff having to take time off work. Companies might also limit their own growth while avoiding crime through methods such as shortening their operating hours.

South Africans were asked to mention how crime has affected their businesses, and 75% of the people said that it increased the costs for security, making it a severe financial burden. For companies to make provision for the security measures that they will need to protect their business, they will need to dip into their profits. These high-security costs might be an unproductive investment as it will increase the business’s costs, which restricts them from investing in the business for expansion. Now more than ever, companies are increasing the amount of money they spend on security due to fears about crime.

The impact of crime, especially for smaller businesses, goes beyond the monetary costs involved. The high levels of crime coupled with some businesses having experienced severe crimes, including robbery and burglary, make companies reluctant to expand and begin to limit their operations. Statistically speaking, small companies that have been directly affected by crime restrict their ability to increase employment as 17 to 22 per cent of businesses were less likely to employ more. Small business owners who have directly experienced crime are unwilling to invest or expand their business due to their concerns about crime. They felt that it was better for them to invest more money in increasing security measures instead of investing in equipment that would be stolen.

Businesses located in informal settlements and townships and those located in ‘high crime’ areas were more reluctant to invest in their business due to concerns about crime. These businesses also stated that their customers and clients fear of crime also had a negative impact on their business. Business owners in townships and informal settlements also mentioned that their companies were negatively affected due to competition from people selling stolen goods.

Businesses that faced more than one severe crime incident, especially those in townships, were likely to close their business down. The crimes that the companies had experienced include incidents such as robbery and burglaries. Not all these businesses had insurance when they were targeted, so they had to rely on credit, loans, or receiving money from their family or networks to cover the costs they incurred after crime incidents. These businesses mentioned that they did not have insurance as the costs were too high for them, and they could not afford to insure their business on top of the high-security costs they had.

Crime does not only impact the economy negatively, but it has many adverse effects in other areas. Crime can lead to an increase in health costs of employees as a result of injuries or stress. The psychological effects of crime include loss of motivation for employees and can cause depression for the business owner. If employees become victims of crime, they might feel guilty as they might feel like they could have prevented this from occurring. If employees become victims of crime, it can lead to feelings of fear, depression and anger. In some extreme cases, the victims of the crime might have flashbacks, and it can cause sleeplessness.  Employees who are affected by crime are also reluctant to return to work. Lower level retailers who have the least protection against crime at work also experience higher than average psychological trauma after a crime incident occurring.

See 6 Security Steps to Take for Your Business After Riots.

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