“The fact that this bill does not meet the constitutional test of rationality would have a major chilling effect on inward foreign direct investment, and our exports to the US and Europe would take a hit,” Peter Draper, director of Tutwa Consulting, said in a statement.
“How does this get the country to President Zuma’s five per cent growth target? If we don’t meet that target, youth unemployment will only grow, our social crisis will intensify and ultimately become a political crisis of significant proportions.”
Draper added that President Zuma should send the bill back to parliament to have section 20 in particular of the bill removed. The section 20 clause of the Private Security Industry Regulation Act Amendment (PSIRA) Bill states that foreign security service providers are obligated to surrender 51 per cent ownership of their security businesses to South African citizens.
These security businesses also include manufacturers and importers of security equipment, and even locksmiths.
(READ MORE: Private security bill could harm S.African economy)
“The foreign-owned component of the industry accounts for less than 10 per cent of the South African private security sector,” Draper explained.
“Does the government fear that private armies operated by foreign providers will march on the Union buildings? Do they fear the surveillance capacity such providers possess, or theoretically could acquire?”
Should the bill be implemented, however, there is a high chance it could be challenged at the Constitutional Court. In addition, the implementation of the bill could significantly change South Africa’s trade dynamics with the rest of the world.
“PSIRA breaches our international trade obligations. In the World Trade Organization’s Uruguay Round, South Africa did not impose any restrictions on foreign investment into the sector. We could revoke this concession, but our trading partners would either be entitled to compensation or could retaliate,” said Draper.