President Jacob Zuma is currently considering the approval of the Private Security Industry Regulation Amendment Bill, which, if approved, could require private security services in the country to sell at least 51 per cent of ownership to local firms or withdraw from the market.The bill has already been approved by parliament.
While the aim of the legislation aims to promote more local ownership of major industries and businesses, fears are that such a move from South Africa could spur on similar measures from other sub-Saharan African countries.
Since the announcement of the bill, a number of bodies have reacted against its ratification. More recently, the Security Industry Association (SIA), an America-based trade association for electronic and physical security solution providers, has come out strongly against it.
The SIA is also an advocate of pro-industry policies and legislation at federal and state levels.
In May, the SIA made an appeal to the United States’ Senate Finance Committee in a letter to put pressure on South Africa through amendments to the African Growth and Opportunity Act (AGOA) in the event that South Africa passes the bill into law.
“A foreign ownership limitation may place South Africa in contravention of its international trade obligations, including AGOA,” wrote SIA CEO Don Erickson to the Senate Finance Committee in a statement.
“Specifically, AGOA requires eligible countries to provide evidence that they are meeting, or attempting to meet, the act’s eligibility requirements, including 'the elimination of barriers to United States trade and investment, including…the provision of national treatment and measures to create an environment conducive to domestic and foreign investment.”
The SIA added that because of the bill’s wide definition of companies that deal in security services, its passing could then easily apply to any company that manufactures, imports, distributes or supplies security equipment.
Private security is a significantly large and lucrative industry in South Africa from both a commercial business level to that of household.
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The bill would also further jeopardise further investment from foreign-owned security companies into the country. According to the statement, 10 per cent of South Africa’s security industry is foreign-owned.
The American Chamber of Commerce in South Africa, the European Union and others have also protested the proposed measure.