Surviving in the New South Africa

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Because ofthe private security industry’s history, many security companies have sought to improve their image in the post-1994 period. One reason for this is the desire to secure lucrative government contracts. Government tender procedures tend to favour companies with a racially diverse or non-white racial make-up. As a result, the 1990s have witnessed the formation of partnerships between small black-owned security companies and larger white dominated companies, or mergers with and buy-outs of white-owned companies by black-owned companies. Examples of this include Fabcos’ merger with Coin, and Khulani Holdings’ purchase of Springbok Patrols.

While such initiatives have worked in a number of cases, they have been a failure in some instances. Many smaller black companies complain that they do not benefit fully from partnership agreements, but are being used simply to comply with tender procedures. A number of partnership agreements have collapsed as a result of these problems.

During the 1990s, large monopolies developed within the private security industry. A spate of take-overs and mergers during the last few years are placing the ownership of the security industry in the hands of a shrinking number of people.

In the armed response part of the industry, large holdings such as Klipton and Paramed have emerged as security service providers. In the guarding industry, Bayette Security has taken over Gintangs, and Fidelity Guard bought out Khulani Springbok Patrols (see below).

Fidelity Guard buy-out of Khulani Springbok In January 1999, a purchase and sale agreement was signed by Khulani Springbok and Fidelity Services Group, whereby Fidelity purchased the entire interest of Khulani Springbok Patrols (Pty) Ltd. The deal was valued in the region of R100 million. The new consolidated company has a workforce of 20 000 people and 2 000 vehicles spread over 150 branches throughout South Africa, Mozambique, Lesotho and Swaziland. Khulani Springbok Patrols arose from a 37-year old family dynasty and grew into the largest guarding company in South Africa. Fidelity boasts more than forty years of business in the security industry. A Security Focus editorial argued that the take-over of Khulani Springbok Patrols by the Fidelity Services Group will form a guarding colossus in Southern Africa which could be one of the largest of it kind in the world.27

A new development is the concept of a ‘one-stop security shop’, where a range of security services — from private investigations, to armed response and cash-in-transit services — can be purchased. Some large private security companies offer services such as cleaning and maintenance, in addition to their traditional security-related services and products.

Private security companies are listed on the Johannesburg Stock Exchange (JSE). Ten years ago, traders on the JSE expressed little interest in private security companies. This has changed, however, as investors realise that the private security industry has become a growing and profitable sector of the economy. As a result, entrepreneurs are increasingly involved in the running of private security companies. This has weakened the perception that the industry is run by former military and police personnel.

Some of these entrepreneurs, however, have little experience in the provision of security. They see security companies as a way of making lots of money in a short time. For example, in some areas of Johannesburg, a household paid R200 per month for an armed response service a few years ago. The same household would now pay between R300 and R400 per month for the same service.

Because of rising prices, some people cancel their contracts with expensive private security companies. This creates a vacuum in the provision of security, which is often met by smaller companies offering cheaper rates. Many of the small security companies offer a professional service. However, some offer cheap rates by cutting running costs to a minimum. This has a detrimental effect on service delivery and the general quality of the security services that are provided.