How crime became the biggest threat to South Africa’s economy

Crime isn’t just an inconvenience to doing business, it’s the “single biggest issue we have to address” if South Africa is serious about economic growth, says Neal Froneman, chair of the World Gold Council and former CEO of Sibanye-Stillwater.

Froneman should know. Not only has he headed a mining company that has battled unchecked zama zama incursions into operating shafts, he also happens to be the chair of Business Against Crime South Africa. It’s a ringside seat to the impotence of President Cyril Ramaphosa’s government to fight runaway crime with a police force that, as the Madlanga commission is revealing, has been repurposed to protect compromised politicians.

“The game has changed. It’s no longer about getting off the greylist, or helping with digital evidence units; things have got way more serious, as we’ve seen every day at the Madlanga commission,” Froneman says. “South Africa is now facing its Madlanga moment – so much depends on whether this commission makes recommendations that are implemented to re-establish the rule of law.”

But it’s unclear if the business sector, often mute in the face of existential crises for fear of angering the government, realises how deep this tear in the fabric goes.

For years, executives would have felt relatively insulated from the wider epidemic, since much of the crime problem involved stealing from companies such as Eskom, or murders in townships miles away from Sandhurst. Which isn’t to say it didn’t affect their cost of capital, or the services they bought; but it didn’t intrude into their homes as frequently.

Yet two events in recent weeks have rattled corporate South Africa badly.

Closer to the boardroom than before

Most recently, and devastatingly for those who knew him, Steven Gruzd, a 53-year-old policy expert at the South African Institute of International Affairs, was kidnapped from a meeting at Corlett Gardens, a suburb on Joburg’s eastern flank, on Friday. He was apparently driven to the George Goch hostel in Benrose, supposedly as part of an “express kidnapping” for ransom, but was later murdered.

In this case, the police acted surprisingly quickly, arresting five suspects who led them to the body. They appeared in court on Monday and were charged with murder and aggravated robbery.

It was, as almost everyone who knew him agrees, utterly senseless. Gruzd was a foreign policy expert, willing to share his sharp insights on South Africa’s relationship with Russia and the rest of Africa. As an obituary on the Daily Maverick recounted, he was a child prodigy at Scrabble and in 1997 was ranked the sixth-best player in the world.

This is a murder that put South Africa’s out-of-control crime wave right back on the front pages of global news outlets – unhelpful when the country is already fighting a myth that the white community is the subject of a “genocide”.

Gruzd’s murder fits the mould of a random act of violence, attesting to how anarchic South Africa has become. But far more sinister is the rise in murder-for-hire incidents in recent months.

That brings us to the second event: the brazen hit on Sibanye-Stillwater lawyer Chinette Gallichan in Joburg’s CBD on March 24. Gallichan, who had been handling retrenchment cases, was followed by two men who shot her and ran away. No-one has been arrested.

Pair this with the assassinations of insolvency practitioners Thomas and Cloete Murray in March 2023 and lawyer Bouwer van Niekerk last September, and it’s clear that murder is far closer to the boardroom than ever before.

Froneman, as the former head of Sibanye-Stillwater, says Gallichan’s murder underscores that neither complacency nor silence is an option any longer.

“We realised some time ago that protecting witnesses and whistleblowers has to be an integral part of our strategy at Business Against Crime, but since Chinette Gallichan’s murder, we realised we now have to extend this to the legal practitioners, insolvency practitioners and others,” he says.

Bad name, bad reputation

But is this not simply plugging holes? Surely this is the job of the police, partly since private organisations such as Business Against Crime have little mandated power?

Froneman agrees, but says the private sector must help where it can.

“Look, neither side – not the government, not business – can do this alone. We must both work together. But what this does show is that it’s the rule of law in the country that has to be restored. And that’s a bigger issue, and it needs political will,” he says.

If criminals know the odds of being detected for a kidnapping or murder are low and the cost-benefit ratio is tilted in their favour, or that cops can be paid off, the incentive for them is that much greater. And if construction mafias masquerading as “business forums” are unofficially sanctioned by local officials who view this as “transformation”, this only accentuates the moral relativism.

This is a major disincentive to invest, as Patrice Motsepe, the chair of African Rainbow Minerals, told a Bloomberg Africa Business Summit last November.

“An international CEO said to me: ‘Is it safe? Because I need to bring some of my smartest people and want to make sure that their families are safe,’” Motsepe said. “It’s a reflection of the bad name and the bad reputation.”

If Motsepe gets it, it’s not yet clear that his brother-in-law, who happens to run the country, quite grasps the gravity of what’s at stake. As another executive who has worked with Ramaphosa says: “Some things he deals with, some things he just ignores, and I can’t even say why that is.”

For instance, it is an indictment that his police minister Senzo Mchunu, inextricably implicated in corruption, has only been suspended and not fired. It is this equivocating that leads people to question the political will to enforce the law.

Given these mixed signals, the question is whether Ramaphosa can rise to meet the “Madlanga moment”, as Froneman dubs it. Unlike oil prices and the Iran war, this one is entirely in our control.

This column first appeared in the Financial Mail. Currency and Financial Mail are part of the Financial Mail Group.

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