A businessman was set on fire after the robbery of his mini-mart in Freeport.
Three men were shot by a guard in a Point Fortin grocery and in a separate incident, bandits robbed a supermarket in Arima of workers’ salaries.
These are just some of the newspaper headlines that traumatised the country last week as the business community continues to be assaulted by criminal elements that have stalked the nation in recent times.
As small businesses continue to be the cornerstone of T&T domestic sector, any attacks on them will hurt the economy.
Speaking in 2021 at the Caribbean Business Forum, Minister of Trade and Industry, Paula Gopee-Scoon, said that there were over 20,000 SME’s in T&T, accounting for approximately 85 per cent of all registered businesses and contributing more than 30 per cent of the country’s Gross Domestic Product (GDP).
In a statement to the Sunday Business Guardian, University of the West Indies lecturer in Economics, Dr Regan Deonanan, said crime has a negative effect not only on the business community but the national economy as well.
Benjamin Ramkissoon, a PhD candidate in Economics at UWI, St. Augustine and a member of Deonanan’s research group, also contributed to the economic analysis in the statement.
“Crime may impact business activity in several ways. Crime may impact affect business hours which, in turn, affects revenue. For instance, high crime rates may reduce the willingness of employees to work evenings and weekends. High crime rates increase costs for businesses such as higher insurance premiums, expenditure on security and surveillance, and replacing stolen property. Property loss and damage increases risk. Criminal activity also influences the choice of location and where businesses choose to remain in operation. Higher crime rates may deter individuals from commerce in certain areas,” the economist said.
They said crime impacts the national economy in several ways as higher crime rates may lead to an increase in the proportion of government budgets devoted to public safety. That draws away from funds that can be allocated elsewhere.
“With business profitability being affected by crime, this drives away investment, both domestic and foreign. This, in turn, affects economic growth. Emigration decisions are often determined by the differential in the standard of living between the home country and the country of destination. High crime rates reduce the quality of life and may lead to higher emigration rates. This can be harmful if it leads to a brain-drain effect i.e., where there is a large movement of skilled labour out of the home country. This affects the stock of human capital,” said Deonanan.
They also argue countries with high crime rates may deter tourists from visiting.
“This can be detrimental to economic activity, particularly for countries where tourism is a large component of the economy. The business model for tourism may also shift to all-inclusive hotels in response to higher crime rates, where backward linkages with the economy may be lower.”
He added that financial services may be affected by corporate and white-collar crime as a well-functioning financial sector is thought to be important for economic development.
“Drug-trafficking and organised crime may be associated with bribery, corruption, and extortion. This can create inefficiencies. Due to the impact on business costs, crime may also be a major constraint for small and medium enterprises, which are important in many developing countries.”
Deonanan also spoke about how crime impacts the cost of doing business.
“Crime has a direct effect on the cost of doing business. Security costs, for instance, are a major accounting cost that may increase for businesses in response to crime. Businesses may have to invest in security measures such as cameras, alarms, and other physical measures to protect their assets and employees. Spending may also increase on security by private firms. These costs can be significant, especially for small businesses.”
He also said another impact on the cost of doing business is via the loss of property.
“Activities such as theft and property damage increase risk. This can directly affect insurance premiums. Replacement costs also contribute to increased expenditure. Crime also has indirect costs for businesses which impact profitability. This includes lower worker productivity and difficulties in access to financing.”
Deonanan also explained crime from an economic standpoint.
“Some economic models examine crime from the perspective of it being a type of economic activity. While crime is morally, and otherwise, wrong, this theoretical thinking enables an objective look at the determinants, and factors influencing outcomes of crime. Individuals decide whether to participate in criminal activity based on the evaluation of related costs – for example, the penalties involved with being found guilty, detection rates, etc. – and benefits – the economic gain from crime.”
He added that many socio-economic factors, however, may be associated with crime and violence. For instance, unemployment, poverty, and inequality may affect crime rates.
Speaking about solutions, he said reducing crime is a complex issue that requires a multifaceted approach and there are several approaches proposed to address crime
“Addressing socio economic factors as a means of reducing the push factors behind crime. Improving quality of life and reducing inequality can reduce the incentive to engage in criminal activity by providing greater resources for individuals.”
He also said authorities should look at reducing the profitability of criminal activity by increasing the cost.
“For example, increasing the penalties for certain crimes or creating a more difficult environment for criminals to operate in. This may involve investing in technology and judicial reform – to the extent that judicial institutions are inefficient.”
Another solution he proposed is building the capacity of individuals in society, such as investment in education alongside creating sufficient and relevant employment opportunities, which may raise human capital capacity sustainably.
He also suggested that authorities in T&T need to look at the quality of education being offered.
Strategic security expert Garvin Heerah told the Sunday Business Guardian that SME’s are “severely impacted” by crime because of their size and lack of resources.
“They are victims and sometimes multiple times. They are small and most of the times ill equipped to have high-level security systems nor even contracts for reputable security companies to provide 24/7 security for their business places. Some of them are reluctantly paying protection money to criminals who see them as a feeding ground for easy cash or goods. It’s a passive robbery they endure once, sometimes twice a week. Some of these business places/owners have vented that they aren’t even prioritised by the T&T Police Service (TTPS).”
Although, he did not give statistics, he observed that many small businesses are “folding up” because of the impact of crime.
“It’s evident by the number of small businesses that are folding up and calling it a day that crime has forced them out of business. Criminals are on a rampage and these small businesses, be it mini-marts or self-employed individuals providing a service or small farmers to an extent are the targets. Constant harassment and robberies have taken a severe dent in their earnings, many have opted to close up shop.”
He also advised small businesses on how to protect themselves.
“There should be good working collaboration amongst their business community. We don’t expect a TTPS police vehicle on every street corner, although that would be nice, but collaboration can help against crime. With one voice they can contract private security with rapid response capabilities who can be their shield in the event of a robbery. Probably an arrangement for reduction in costs, as it may be a group of clients, can be considered.”
He advised that all business places should immediately consider a risk and security assessment.
“That will pinpoint the gaps and areas of vulnerability to determine strengthening and hardening your target. I gave this same advice after the budget last year to the Supermarkets Association when I spoke at their budget review, I’m not sure how much of the owners actually considered. Sadly though, many business owners are seeing security and security enhancement as too hefty a cost. By chancing the risk, it may result in loss of life or property.”
