Crime, terror taking toll on African firms – EU expert

September 13, 2012

, NAIROBI, Kenya, Sep 13 – Private firms in Sub-Saharan Africa are losing up to 10 percent of their total sales revenues through crime and security related costs.

According to the European Union Head of Delegation to the African Union Gary Quince, the major insecurity threats to most of the companies in the region include organised crime, terrorism and political violence.

Speaking at a forum in Nairobi on Africa business and insecurity, Quince said risks increase dramatically where governments, institutions and markets fail to provide basic security, justice and economic opportunities for citizens.

“Firms in Sub-Saharan Africa lose a higher percentage of sales to crime and spend a higher percentage of sales on security than any other region in the world. So if anything can be done to improve security the benefits will go directly to increase profits and hence increase job creation,” he said.

Quince said 30 percent of firms in the region identify crime as a major problem for their businesses. Civil wars on the other hand cost on average 30 years of Gross Domestic Product (GDP) of any country, while trade takes 20 years to recover.

He said on average, conflict affected countries have over 20 percent higher poverty rates than peaceful countries. A country loses 0.7 percent of GDP every year for each neighbour in conflict.

“For example State failure in Somalia costs Kenya around $250 million per year, “he said.

He however pointed out several countries emerging from long legacies of political and military or criminal violence are the ones making the fastest progress in their economies including Ethiopia, Mozambique and Rwanda.

Quince said Kenya being one of the leading economies in Africa is now being watched closely by foreign investors on the conduct of next year’s elections, but said most investors are hopeful that they will be peaceful.

“I was here in the year 2002, and we had the best elections in the world and if you can remember, this sent a very good signal to every local and foreign investor. We expect the same is going to happen in the next year elections,” Quince said.

The two-day forum was organised and hosted by the New Security Foundation, a private organisation based in Berlin, Germany, in partnership with the Government of Kenya, Microsoft among other partners.

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