Opinions differ strongly about the effects of South Africa’s crime wave on foreign investment. Miepje Commandeur and Helma van de Vondevoort report
LOCAL representatives of South Africa’s leading trade partners regularly suffer from crime, a snap survey by the Mail & Guardian shows.
Staff members of foreign embassies and chambers of commerce are often at the forefront of deals running into billions of rands of imports and exports. (Some indication of these are contained in trade figures from the Department of Customs and Excise for the first nine months of 1996.)
These diplomats and trade attaches are the very people who have to sell South Africa as a viable trading partner and a land ripe for investment.
But many of them, and still more of their employees, have fallen victim to the crime wave. Some say this will have an impact on trade and investment; but others are not as concerned.
JAPAN
Imports: R8,7-billion
Exports: R6,3-billion
Three members of the Japanese Chamber of Commerce have had their cars hijacked. According to a chamber representative, the Japanese embassy has increased awareness among Japanese nationals about crime.
The police need to be strengthened and become less corrupt, he says.
The director of the Japanese External Trade Organisation in Johannesburg, Shintaro Matoba, had his car stolen in Sandton City. He believes that the reasons for the current crime are the high unemployment rate and the poor quality of policemen.
Investments from Japan are “half-and-half” affected by the crime level, he says.
AUSTRALIA
Imports: R2,6-billion
Exports: R1,5-billion
Noel O’Brien, a director of the Australian South African Business Association, has had a personal experience of local crime. Four months ago, two robbers held a knife to his chest in the garage of his office building in central Johannesburg and grabbed his portable computer.
During the past six months, three other employees have been mugged, one was hijacked and the bakkie of the association’s driver has been stolen twice.
Earlier this year the association moved its offices to the suburb of Parktown.
O’Brien says that he has lived in South Africa for 22 years, but crime has grown worse in the past three years. “The police can’t cope with it anymore. It’s a war zone out there. That’s why I think troops should be patrolling the suburbs at night, or at least there should be roadblocks or control points on the streets.”
O’Brien says Australians are not keen to invest in South Africa: “The security situation, the labour unrest, low productivity and the high level of taxation in South Africa are the main concerns from Australian investors.”
“Why should they look at South Africa as a good investment area? They would rather go to Asia.”
GERMANY:
Imports: R16,2-billion
Exports: R4,5-billion
A German study last month found that one in five local managers had one or more murders reported among staff.
The survey by the German Chamber of Commerce in South Africa, representing 82 companies with more than 35 000 employees, found that, on average, every 18 months the family of a managing director of a German company in South Africa becomes a victim of crime.
More than three-quarters of the German companies say that their future growth is endangered by the high crime level.
One of the managers surveyed said: “We see the present state of anarchy, lawlessness and escalating violent crime as a major threat to the survival of our business.”
Another manager warned: “The whole economy is being damaged by the virtual non- existence of a criminal justice system. Crime is eroding consumer confidence, forcing many people to leave the country.”
Only 15% of German companies claimed they would not change their future plans because of crime. This group employs 47% of the total workforce – and this indicates that smaller companies are more likely to change their investment strategies owing to crime.
UNITED KINGDOM
Imports: R12,3-billion
Exports: R12,3-billion
The experiences of British diplomats include the hijacking at gunpoint in Johannesburg of the second secretary of the British High Commission.
But Britain – South Africa’s largest trading partner – is not discouraged by the high crime rate. The press representative at the High Commission, Andrew Noble, says crime is not “a significant factor” in Britain deciding about investment in South Africa.
“What matters are the business prospects and British investors feel that they are very good.”
The High Commission is encouraging trade, investment and the establishment of more businesses in South Africa, says Noble. “We are very committed to this place.”
CANADA
Imports: R903-million
Exports: R715-million
Canadians also prefer to look at the opportunities that the South African market offers rather than worry about the high crime rate. Senior Trade Commissioner Ron Hoffmann of the Canadian High Commission Trade Office says that in 1993 there were only six Canadian companies with offices or operations in South Africa; now there are more than 70.
“And it is growing fast. Most of our companies here are doing well. The South African market is changing rapidly and the Canadians are very interested in investing in South Africa.”
ITALY
Imports: R4,6-billion
Exports: R2,43-billion
Giorgio Marini, first counsellor of the Italian Embassy in Pretoria, says that staff as well as consular representatives in both Pretoria and Johannesburg have suffered several thefts and attempted hijackings. Alarm systems at the embassy and at the homes of staff have been improved.
He believes that criminals should be sentenced more severely and there should be more visible policing.
Farini says, however, that Italy is “rather optimistic” about the future and adds: “Investment from Italy is not being adversely affected by current crime levels.”
More than a year ago, as a result of a dispute with squatters, a petrol bomb was thrown into the bedroom of the son of Maria Haenen, the assistant to the secretary- general of the Italian Chamber of Commerce in Johannesburg.
She says she now finds it more difficult to advise Italian companies to invest in South Africa. “It is not a safe country and I have to tell them that,” she says.
THE NETHERLANDS
Imports: R2,7-billion
Exports: R3-billion
Staff at the Dutch Embassy in Pretoria have not personally suffered from crime, but they have become more careful in their daily lives because of all the stories they hear and read.
Although no research has been done, they believe that Dutch companies are discouraged by the “poor South-African investment climate”, of which crime is one factor.
However, at least one highly placed diplomat – who did not want his nationality to be identified – says that anxiety about crime is just a storm in a teacup. “There are too many diplomats with too little to do, leaving them with too much time to worry about the crime situation in this country,” he said.
Jenny Cargill of the consultancy BusinessMap says investors display many shades of opinion concerning the impact of crime. It’s certainly a factor in the decision to invest foreign funds, but ii is only part of a good investment backdrop. Foreign investors are also looking for sound macro-economic policies, incentives and a strong regional market. However, “consistent reports of reduced crime” will only mean greater confidence, says Cargill.