DOWNTOWN JOHANNESBURG puts a bounce in your step. Streets bustle with noisy fruit-sellers and minibus drivers seeking custom. But South Africa’s commercial capital can also put a knot of fear in your stomach. Jozi, as locals call it, is notorious for muggings and armed robbery. Corporate offices bristle with impenetrable security and armies of guards. Yet the area has grown less edgy since Schumpeter first visited, nearly two decades ago. For that, give some credit to Business Against Crime. The association pays for hundreds of CCTV cameras, and for staff to monitor them and alert police to mischief.
South African bosses are far from alone in their concern over crime—be it against their customers, employees or property. According to the World Bank, 17% of all firms (from a global survey of 135,000) count crime as a “major constraint”. In Brazil or Ivory Coast it is nearer to 70%. In El Salvador and Kenya four in five firms pay for private security. A survey in Mexico found that small businesses there spend 6% of their income on such protection, double the level of a decade ago. Companies distributing goods in gang-run neighbourhoods of Medellin, in Colombia, lose 8-15% of their revenues to theft, says Sergio Tobón, who heads Proantioquia, which unites 50 of the country’s biggest companies in the city, once home to Pablo Escobar. In the United States, a single killing depresses local property prices by 1.5% on average the following year. In Washington, DC, every homicide is associated with two businesses closing.
In truly lawless regions, the simplest solution is for companies to stay away—or hire private armies. In peaceful places they help maintain order at a remove, by providing jobs, paying taxes and being good corporate citizens. But in locations that are, like Johannesburg, dangerous but too important to ignore, they increasingly push back directly.
Proantioquia bankrolls research into the best ways to combat organised criminals. Other Colombian firms urge banks to extend loans to their hard-pressed workers so that they avoid gota a gota, a vicious local species of loan shark. In Monterrey, a large industrial centre near Mexico’s border with the United States, big local firms known as “the group of ten” argued for reform of corrupt state police who had let violent criminals prosper. They helped pay for better police training and lobbied for higher wages and benefits for new recruits. More firms jointly commissioned regular surveys of public attitudes on crime, to focus politicians’ minds.
Corporate crime-fighting is not confined to violent parts of the emerging world. In Ferguson, Missouri, local businesses such as Emerson Electric and Centene, a health-care outfit, rushed to open offices and employ locals after anti-police protests five years ago. The idea was to snuff out popular anger before it fuelled violence. After a horrible spike in killings in Chicago three years ago, companies with a large presence there including Allstate, an insurer, and Boeing, pooled $40m to help stem gun-violence, for instance by paying for therapy and jobs training for vulnerable young men who might pull the trigger next. AT&T opened a call centre and hired 400 workers from the city’s most blighted districts, to foster economic opportunities.
Corporate caped crusaders have a range of motives. They fret that crime will hurt the wider economy and thus (eventually) them, too. Whitney Smith of JPMorgan Chase, a bank which has funnelled $150m into rehabilitating parts of Detroit and is now contributing to efforts in Chicago, says that companies, civic organisations and local government all feared the Windy City was earning a reputation for violence. “It felt like a threat to economic growth for everyone,” she recalls. Last May Mexico’s big business lobby, CCE, called violence the single “greatest obstacle” to economic activity. Mr Tobón says firms in Medellin pay to train ex-guerrillas for civilian jobs for the same reason.
Max Kapustin of the University of Chicago estimates that every murder drives 70 residents from a city like his. Of the seven American cities most notorious for lawlessness, five lost a big share of their population in the past 30 years, notes Thomas Abt, author of a forthcoming book on urban violence called “Bleeding Out”. Booming cities like Johannesburg might grow even faster with less of it.
Firms’ motivations can also be more immediately self-serving. Companies profit directly from crime-fighting. ShotSpotter has installed microphones on streets in 100 American cities to help police pinpoint where and when guns are fired. LoJack tracks stolen cars. Detective agencies such as Pinkerton and consultants like Control Risks advise multinationals on security. In Mexico corporate protection is big business, with 2,000 regulated companies and turnover of $1.5bn in 2016. Add another 8,000 informal firms and their combined 500,000 security guards outnumber Mexico’s armed forces by 80%.
Other firms see their anti-crime efforts as a tool to attract and retain workers. In Chicago local firms like being seen helping their hometown—not least if it helps them to recruit and motivate employees. “People want to work in an institution that has a mission,” says Toni Irving, head of Get In Chicago, an anti-violence corporate group. Workers crave more meaningful activities, she reports, and enjoy volunteering with anti-crime groups. If that makes the city a safer place to take a stroll, so much the better.
Firms will not put an end to crime—nor should they strive to. Not counting corporate taxes, Ms Irving reckons that business groups provide perhaps a tenth of Chicago’s total spending on crime-prevention (the figure in emerging-world cities may be higher). In the end, public safety is the responsibility of governments. Still, until good policies render businesses’ extra tithe unnecessary, it is best viewed as a kind of speculative investment in ideas that, if successful, public crime-busters can roll out at scale.