The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas leads the entire Caribbean on economic losses stemming from crime, losing $434 million or almost 5 per cent of its annual gross domestic product (GDP) to the scourge.

The extent of crime’s impact on Bahamian economic output and wider society is laid bare in an Inter-American Development Bank (IDB) report, which shows that out of 17 Latin American and Caribbean countries, only Honduras and El Salvador incur greater annual costs as a proportion of GDP.

The study, ‘The costs of crime and violence: New insights in Latin America and the Caribbean’, reveals that the Bahamas is one of only two countries in the region where crime costs its citizens and residents more than $1,000 per person annually.

Once currency differences are accounted for, crime was shown as costing Bahamas residents $1,177 per capita annually, second only to Trinidad & Tobago’s $1,189 per person.

The IDB study described crime’s costs as “particularly high” in the Bahamas, while placing Jamaica and Trinidad & Tobago in the same category, with more than 75 per cent of Bahamian companies spending money on security personnel, technology and equipment.

Again, the Bahamas is second only to Trinidad in the proportion of companies forced into expenditure on security measures, which has become an ‘everyday feature of life’ for too many businesses.

The private security industry has been one of the few growth areas in the Bahamian economy since the 2008-2009 recession, reflecting just how strong a grip crime - and the ‘fear of crime’ - maintain on the private sector and wider society.

“In Honduras, private spending is almost 2 per cent of GDP – more than twice the regional average – and the higher bound is above 3 per cent,” the IDB said of spending on security measures.

“El Salvador follows with costs incurred by the private sector hovering between 1.6 and 2.7 per cent of GDP. The Bahamas and Brazil also show high private costs, with estimates varying between 1 and 1.9 per cent.”

The IDB study also found that when it came to the Caribbean’s urban areas, New Providence and Nassau led the way when it came to the number of physical assaults, robberies, burglaries, thefts and car thefts per capita. Nassau was above the global and regional average for all categories apart from burglary and theft.

The findings again illustrate why it is a matter of national urgency, and priority, for the Bahamas to get a ‘grip on crime’, given the enormous economic and social costs it continues to inflict, and which threaten to both undermine its main industries and overall competitiveness.

“Not surprisingly, the three countries in the [Caribbean] that lose the highest percentages of their GDP to crime are those with the highest levels of violent crime: The Bahamas, Jamaica, and Trinidad and Tobago,” the IDB study found.

“The high levels of crime likewise affect the private sector in the [Caribbean]. The number of firms in the Caribbean experiencing losses due to crime, and the proportion of firms that pay for private security, are higher than the international averages. These costs draw money away from other activities that could potentially enhance productivity - such as the amount spent on research and development, which is lower than the amount spent on crime overall.

“Finally, although government expenditure on combating crime is relatively high, the money is spent overwhelmingly on police, but this has not translated into higher police effectiveness,” the report continued.

“Moreover, with precious little of the total expenditure going to the judicial systems and crime prevention, much of the sub-region has ended up with overcrowded prisons, where nearly half of the detainees may wait years before going to trial.”

The report, which has been studied by Tribune Business, seeks to measure crime’s costs from three perspectives. Apart from the impact on the private sector, and the spending by households and companies on security, it also analyses the cost to government in terms of public expenditures on the judicial and prison systems, plus the police force.

And, finally, it also attempts to measure crime’s social costs, particularly its impact on Bahamians’ quality of life, and income lost by the imprisonment of inmates at Fox Hill prison.

The Bahamas was found to lead the Caribbean by almost a full percentage point of GDP when it came to crime’s costs, estimated to cost this nation 4.79 per cent of annual economic output - a sum equivalent to $434 million.

Only Jamaica came near to the Bahamas at 3.99 per cent of GDP per annum, with just Honduras and El Salvador ahead of this nation in the Latin American and Caribbean region, both losing more than 6 per cent of their annual economic output.

Adjusting for different currencies and exchange rates, the IDB study found: “Trinidad & Tobago and the Bahamas have the highest costs at well over US$1,000 per capita in international US dollars.

“Argentina is a relatively distant third, with per capita costs slightly below $700 in international US dollars. Guatemala, Paraguay, and Honduras, in that order, have the lowest per capita costs at or below $300 in international US dollars.”

The Bahamas was also shown to be above the regional average when it came to income lost as a result of murders/homicides, the report pegging this at almost 0.5 per cent of annual economic output - a sum equal to $40-$50 million.

“On average, foregone income related to homicides represents 0.32 per cent of GDP,” the IDB study said. “However, this average hides enormous variability across countries.

“The Bahamas has the third highest homicide cost, at 0.48 per cent of GDP..... The third country classified as having a high social cost of homicides [after Honduras and El Salvador] is the Bahamas, with an average cost from homicides of 0.53 per cent of GDP during the sample period. The Bahamas had a peak cost of 0.64 per cent in 2011, and the lowest value in 2010 at 0.47 per cent.”

The Bahamas also incurred one of the high costs in income foregone as a result of the incarcerated prison population at Fox Hill, the IDB estimating this as equivalent to 0.35 per cent of GDP - around $30-$40 million - as result of inmates not being engaged in productive work.

Adding this to the 0.3 per cent of GDP spent by the Government on running Fox Hill prison, the report found the Bahamas was spending 0.65 per cent of its annual economic output on incarceration - a proportion that was the “second highest loss” in the Latin American and Caribbean region.

Taking all this into account, the Bahamas led the Caribbean in terms of the social costs inflicted by crime. “Overall, social costs of crime are lowest in Chile, at 0.28 per cent of GDP, followed by Argentina and Barbados, both at 0.30 per cent,” the IDB study found.

“Countries with the highest costs are Honduras, at 2.19 per cent of GDP, El Salvador, at 1.44 per cent, and the Bahamas, at 0.94 per cent.”

When it came to government spending on the police/security forces, and crime prevention, the IDB report found that the Bahamas lagged behind only Jamaica and Barbados, pegging this at between 1.15 per cent and 1.94 per cent of this country’s GDP.

However, conversely, the Bahamas and these other two nations were shown as spending the least - around 0.06 per cent of GDP - on their judicial systems and the administration of justice.

The IDB report said this “overreliance on the police” to combat crime had resulted in the Bahamas having the highest ratio of police to citizens in the region - some 846 officers per 100,000 persons.

“However, high police density has not necessarily resulted in rapid police response or higher police effectiveness in solving and investigating crime,” the study added.

Referring to a survey of persons living in Nassau and four other Caribbean metropolitan areas, the report said: “Of those polled...., an average of 56 per cent said that if they called the police because someone was entering their home, it would take the police more than 30 minutes to arrive.

“It would take more than three hours, according to 9 per cent of respondents, and 2.5 per cent said there are no police in their area at all.”

The Bahamas, though, was said to have the highest murder rate detection based on 2013 data, pegged at 51 per cent.

And the Christie administration has been attempting to address the justice system’s weaknesses via the $20 million ‘Citizen Security’ initiative with the IDB, increasing the number of criminal courts and recently unveiling the Office of the Public Defender.