JOHANNESBURG (AP) — A proposed law in South Africa that would require foreign-owned private security firms to sell at least 51 percent of their businesses to South Africans will deter foreign investors and violate international trade deals, a business group said Wednesday.
The measure approved by Parliament would affect the roughly 10 percent of private security companies that are foreign-owned, employing 30,000 to 40,000 people, all of whom are South African citizens. However, the South African Chamber of Commerce and Industry said it hopes President Jacob Zuma will return a regulatory bill containing the measure to lawmakers for revision instead of signing it.
The bill is part of a wider debate about the direction of the economy in South Africa, where the government seeks to curb economic inequality and promote black entrepreneurs while seeking to boost slow growth and low levels of investment. Zuma pledged to implement a “radical” program of social and economic change that will require “far-reaching interventions” in a speech about the state of the nation that he delivered on Tuesday.
Neren Rau, CEO of the business chamber, said state “interventionism” was making the economy increasingly difficult to navigate for foreign investors seeking a stable business environment in South Africa.
“We’re sending a contrary signal, the wrong signal,” he said of government policy.
Supporters of the proposed measure on private security firms argue that foreign ownership of the companies could threaten national security, and say they worry about the nationwide deployment of armed agents who are not working for the government. South Africa’s private security industry is robust partly because of a high crime rate that police are struggling to control.
Carol O’Brien, head of the American Chamber of Commerce in South Africa, said it is absurd to suggest that foreign-owned private security firms could, as some have alleged, collect intelligence that puts the country at risk. South Africa could face retaliatory action against its exports from other countries if it reneges on its commitments to free trade and full market access, she said.
South African exports to the United States were worth $3.6 billion in 2013, according to the American Chamber of Commerce. It said the United States was the biggest destination for South African exports of passenger cars, receiving 42 percent of the total.
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