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Johannesburg - The implementation of the Private Security Industry Regulations Amendment Act could lead to a 10% decline in South African exports to the US and European Union, economist Roelof Botha warned on Tuesday.
Presenting an economic impact of the mooted legislation - currently before President Jacob Zuma - Botha said the decline in exports would, in turn, reduce gross domestic product by R133.4bn, and result in a combined tax loss of R52bn.
The legislation, if implemented in its current form, will force foreign-owned private security firms to sell 51% of their companies to South Africans, a move that has unsettled the industry. Government introduced the ownership clause amid fears that foreign ownership in the industry posed security threats.
The act will affect major security companies such as ADT, Securitas, G4S and Chubb. Botha said the clause in the act is an enemy of the South African economy. “It is quite silly and dangerous,” he said.
He said the implementation of the law could result in South Africa breaching international trade obligations such as the General Agreement on Trade in Services and African Growth Opportunity Act. The envisaged 10% decline in South African exports would be as a result of trade retaliation. The US and European Union are South Africa’s biggest trading partners.
Botha said the act is not conducive to investment and job creation. The private security industry employs 455 510 people.
He said the legislation heightens the risk of doing business in South Africa and could discourage foreign investment in other sectors as well.
Costa Diavastos of the Security Industry Alliance said the industry would continue to lobby government. Diavastos said there is no basis for the national security concerns.
In its motivation for the tighter regulation of the private security industry, government has cited various problems associated with the growth of private security companies. These include lack of accountability for firearms in possession of members of the industry, criminality in its ranks and the growth of foreign ownership.
