Foreign businesses clause in bill could be unconstitutional

The Security Industry Alliance points out that given the complex nature of the private sector, it would be impractical to measure foreign ownership, to nationalise and transfer 51% ownership to locals. (Oupa Nkosi, M&G)

The Security Industry Alliance points out that given the complex nature of the private sector, it would be impractical to measure foreign ownership, to nationalise and transfer 51% ownership to locals. (Oupa Nkosi, M&G)

Section 20 of the Private Security Industry Regulation Amendment Bill could be unconstitutional, the Security Industry Alliance (SIA) said on Thursday.

The section requires foreign-owned security companies operating in the country to have a local shareholding of at least 51%.

“The process by which it was introduced was flawed. It was parachuted at the last minute, without notice or consultations,” SIA chief executive Steve Conradie told reporters in Johannesburg.

“It will be in breach of South Africa’s international trade obligations, it is damaging to local and foreign investment in South Africa.”

The bill, passed by Parliament in February last year, aims to limit foreign ownership in security companies.

Conradie said given the complex nature of the private sector, it would be impractical to measure foreign ownership, to nationalise and transfer 51% ownership to locals.

“A number of foreign embassies and trade experts have expressed in writing their acute concerns that the forced transfer ... will not only be regarded as an abrogation of South Africa’s international trade agreements ...
but will also have a profoundly negative effect on international investor sentiment towards South Africa.”

Conradie said the SIA was, however, encouraged by the ongoing dialogue with Police Minister Nkosinathi Nhleko to resolve the matter.

The bill was presently awaiting President Jacob Zuma’s signature.

“We have asked him to review it ... We are hopeful that the president will refer the bill back to Parliament for the removal of Section 20.”

The SIA is the biggest employer for entry-level jobs in South Africa. – Sapa

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