We have received a most interesting report of a survey, commissioned by the President, and carried out by SBP, which was formerly the Small Business Project. The survey was done in Durban, Cape Town and Johannesburg and covered nearly 450 small and micro businesses, almost all of which are owned by historically disadvantaged black Africans and are at stages in their business development which promise growth and employment. Survivalist enterprises were not included at all. The importance of qualifying the survey sample is that perceptions of the negative effects of crime are not confined to advantaged groups, as is often thought to be the case.

The report is both extensive and intensive and quite impossible to summarise in this article. Some of the salient points make very interesting reading, however, and it is likely that many readers will identify with them. Seventy percent of the sample admitted to feeling apprehensive at their vulnerability to crime. Over half, in fact, reported that their businesses had suffered from at least one criminal incident during the past year. Being small enterprises, the differentiation between the business itself and the owner is not nearly as clear as it would be in the case of a larger business, so some of the incidents might have involved the owner-entrepreneur, albeit in the context of his or her business. The number of businesses that had experienced more than one incident is particularly alarming – thirty-one percent had suffered twice and just about twenty percent three times or more. The majority of the crimes were burglary and robbery (sixty percent), but in the context of crime, the statistics are only a portion of the relevant issues. Insecurity and the fear that a business may be victimised at any time accounts for a notable increase in expenditure on security mechanisms. Indeed, one shudders to think of the cost of security within the South African business environment, and beyond. Older people will remember when there was no security industry to speak of. One could even invade the pitch at Kingsmead and, in fact, the numerous ad hoc games that took place on the field during the breaks were encouraged.

The report also had this to say in the Executive Summary: “A quarter of all respondents expressed reluctance or unwillingness to expand or invest in their business because of the threat of crime.” One has to wonder, in light of this alarming finding, how our small business sector can be expected to realise its optimal potential as the driver of the national economy into the future. Based on the figures extrapolated, very small businesses may expect to have their turnovers cut by twenty percent as a result of crime. This risk is reduced in the case of larger enterprises, but is significant, nevertheless. The researchers also found, significantly, that up to half the businesses surveyed did not have insurance adequate enough to compensate for the losses to crime. In many cases, there was no insurance at all since the high risk factor puts the cost of insurance out of the reach of them.

Successful entrepreneurship is about optimism. The belief in one’s self to meet business challenges is complementary to the belief that the environment in which business is to be done, however volatile, does not contain potential threats beyond those that are to be expected, such as market forces, input costs and so on. Crime adds a new dimension to the normal range of business challenges and is a critical factor in the obstruction of the realisation of our peoples’ entrepreneurial spirit.

Andrew Layman: PCB CEO

This article appeared in the Public Eye on the 24 July 2008