Crime Fear of South African Investors

The Birmingham Post (England), July 11, 1998 | Go to article overview

Crime Fear of South African Investors


When investors ask if South Africa is a safe place to do business, they are not simply referring to profit margins and the stability of the rand.

They are concerned with the more practical issue of physical safety. "Violent crime is a major fear among all sectors of the community and a potential deterrent to inward investment," said the rating agency Fitch IBCA recently.

Violent criminal activity has actually declined slightly since the frightening peaks of the mid-1990s, according to police statistics.

The murder rate fell from 66.6 per 100,000 people in 1994 to 59.6 in 1997. Recorded vehicle theft fell 3.5 per cent in the same period, while violent robberies dropped almost 18 per cent. But crime remains sky-high by global standards and the country's d angerous image has stuck.

"The image of South Africa as a country to invest in is diminishing as a result of its reputation for violence," said one senior European Union diplomat based in Pretoria.

In the sprawling city of Johannesburg, home to five million residents, people walk fast during the day and avoid eye contact. Virtually no one who has a car walks at night.

However, South Africa is, in many ways, a foreign investor's dream. An emerging market in a class of its own, it combines sophisticated financial markets and a first world infrastructure with third world labour costs.

Since shedding its status as an international pariah in 1994 with its first alace elections, it has also become a "hip" place to invest. Few countries boast a president as widely admired on the world stage as Nelson Mandela.

Cash has flowed in, with foreign direct investment (FDI) rising to 13.7 billion rand (pounds 1.3 billion) in 1997 from 4.9 billion rand in 1994, according to the Ministry of Trade and Industry.

In 1997, foreigners were net buyers of 26 billion rand on South Africa's equities market compared to five billion rand the previous year.

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