Organised crime is a significant threat to South Africa’s stability and economic growth – as it is elsewhere on the continent, according to the Global Initiative Against Transnational Organized Crime’s report Strategic organized crime risk assessment South Africa, published in September 2022.
Illicit trade has a negative impact on the business landscape in multiple ways. “When directly competing with legal markets, such as in the case of tobacco, stolen or counterfeit goods, illicit trade competes with legitimate businesses for profit, which in turn impact on legitimate employment opportunities and opportunities for market expansion,” says Dr Carina Bruwer, a senior researcher at the Institute for Security Studies.
Illicit enterprises do not comply with legal or regulatory obligations, adhere to labour regulations or pay tax, which gives them a competitive advantage. Their agility and political connections allow them to manoeuvre through supply chains, exploiting legitimate business processes. “When legitimate business processes are exploited for illicit trade, the public loses confidence and trust in both private and public institutions,” says Bruwer.
“Businesses must seek to increase oversight and transparency, insist on political will to address the existential threat posed by organised crime and increase public-private partnerships to safeguard the legitimate economy against illicit trade.”
Dr Carina Bruwer, a senior researcher at the Institute for Security Studies
While the government has taken steps to root out illegal trade and associated activities such as corruption and money laundering, the scope and depth of the illicit economy continues to pose a significant threat to the wellbeing of South African citizens and acts as a persistent drain on the country’s economy. South Africa’s greylisting by the FATF in 2023 illustrates this.
Bruwer says government’s limited resources hamper its ability to safeguard the country, so businesses need to implement preventative measures to avoid being infiltrated for illicit purposes. “This especially includes banking institutions and supply chain providers who are crucial for moving illegal commodities and laundering their profits,” she argues.
“Ongoing capacity building in the private sector will be crucial to counter the ever-changing means of doing business illegally.”
Businesses also need to vet and educate employees and clients, and cooperate with law enforcement agencies to ensure effective investigations and prosecutions of networks and individuals engaged in illicit business activities. Ongoing capacity building in the private sector, particularly in specialised areas such as technology-enabled crimes, will be crucial to counter the ever-changing means of doing business illegally.
But perhaps most pertinent, says Bruwer, is the need for industry to upskill workers and create jobs to minimise the potential pool of individuals seeking to benefit from illicit trade due to limited legitimate alternatives.
Find out more about safety and security in development:
- Read the Overview of CSI spend on safety and security in 2023.
- See the 2022 research findings: Overview of CSI spend on safety and security in 2022.
Source: The original version of this article was published in the Trialogue Business in Society Handbook 2023 (26th edition).
