South Africa Economic Update: Raising South Africa's Economic Prospects by Curbing Crime

The fourteenth edition of the South Africa Economic Update, Safety First: The Economic Cost of Crime in South Africa, discusses South Africa’s economic prospects and highlights the critical need to address the challenge of high crime, to reduce its adverse effects on the economy and society at large.

South Africa's GDP growth has returned to its pre-pandemic trend and is expected to increase by 0.7 percent in 2023 and is projected to rise to an average of 1.5 percent from 2024 to 2026 due to the gradual easing of electricity supply constraints. Accelerating the implementation of structural reforms will boost South Africa’s growth potential.

The challenge of high crime rates undermines the country’s economic dynamism, with an impact estimated to be at least 10 percent of GDP every year. The report includes a focus chapter on the economic impact of crime in the country. High rates of crime damage the economy and contribute to misallocation of resources, through stolen property, protection costs, and missed economic opportunities. The report analyzes how this impact permeates through the economy, including on businesses, households, and the state, underscoring how crime contributes to the misallocation of resources in the economy and weighs on its growth potential.

The report discusses what it will take to address the challenge of crime – building on theory and successful experiences in South Africa and abroad. It emphasizes that:

1. Addressing high crime rates in South Africa requires an integrated approach given the multi-dimensional drivers of crime.
2. Addressing the declining capacity of the police force should be a key priority.
3. Sustainably reducing crime requires tackling the root causes of crime linked to poor socioeconomic outcomes and South Africa’s legacy of exclusion and investing in violence prevention.
4. Continued progress in addressing the legacy of state capture is critical for tackling organized crime.
5. More research needs to be done to better understand the cost of crime to the economy and design adequate policies to combat it.