ATC241001: Report of the Portfolio Committee on Police on the 2024/25 Budget and Annual Performance Plan of the Private Security Industry Regulatory Authority (PSIRA), dated 11 September 2024

Police

 

Report of the Portfolio Committee on Police on the 2024/25 Budget and Annual Performance Plan of the Private Security Industry Regulatory Authority (PSIRA), dated 11 September 2024.

 

The Portfolio Committee on Police examined the Budget and Annual Performance Plan (APP) of the Private Security Industry Regulatory Authority (PSIRA) for the 2024/25 financial year, as well as the projections of the Medium-Term Expenditure Framework (MTEF) for 2025-2027, which were included in the Estimates of National Expenditure (ENE) 2024. The Committee reports as follows:

 

1.Introduction

 

  1. Structure of the report

 

  The Report provides an overview of the 2024/25 Budget Hearings of PSIRA and is   divided into the following sections:

  • Section 1: Introduction. This section introduces this Report as well as a summary of the meeting held during the hearing.

  • Section 2: Legislative Mandate. This section provides an overview of the Authority’s legislative mandate.

  • Section 3: Budget projection. This section provides an analysis of the projected operating expenditure and revenue of PSIRA for the 2024/25 financial year.

  • Section 4: Performance Indicators. This section provides a summary of PSIRA’s performance indicators for the 2024/25 financial year.

  • Section 5: Committee observations. This section highlights selected observations made by the Portfolio Committee on Police on the budget and performance indicators of PSIRA.

  • Section 6: Recommendations. This section summarises the recommendations made by the Portfolio Committee on Police to PSIRA.

  • Section 7: Conclusion. This section provides a conclusion to this Report.

 

 

 

 

  1. Meeting held

 

The Committee met on 28 August 2024 to consider the 2024/25 Budget and APP of PSIRA.

 

 

2.Legislative mandate

 

The Bill of Rights as contained in Chapter 2 of the Constitution, 1996, enshrines the rights of all people in South Africa and affirms the democratic values of human dignity, equality and freedom. The adequate protection of fundamental rights to life and security of a person as well as the right not to be deprived of property is fundamental to the well-being and to the social and economic development of every person. The protection of these rights is afforded to state security agencies established in terms of the Constitution, but the private security industry in general also plays an important role in protecting and safeguarding these rights.

 

Section 199 of the Constitution provides for the establishment of security services which includes a single police service, single defence force and any intelligence services established in terms of the Constitution. In terms of section 199(3) of the Constitution, any other armed organisations of services may only be established in terms of national legislation.

 

PSIRA was established in terms of Section 2 of the Private Security Industry Regulation Act, 2001 (Act No. 56 of 2001). The Authority’s mandate is to regulate the private security industry and to exercise effective control over the practice of the security service providers in the public and national interest, and in the interest of the private security industry itself.

 

The Authority’s funding model based on annual fees and the growth of the private security industry in relation to employment levels, has become redundant. In this regard, the Authority intends implementing the Private Security Industry Levies Act, 2002 (Act No. 23, 2002) and is engaging National Treasury on this matter. These engagements continue for reviewing the Act into a Money Bill in terms of section 77 of the Constitution to be re-introduced in Parliament by National Treasury as the custodian of Money Bills. The Committee should engage the Ministers of Police and Finance to encourage the reintroduction of the Levies Act as a matter of urgency.

 

The establishment of an industry guarantee fund is a priority of the PSIR Act, which aims to provide limited liability cover for industry clients. However, the fund is reliant on the implementation of the Private Security Industry Levies Act, 2002 insofar as initial capitalisation of the fund is concerned.

 

3.Projected budget

 

The budget of the PSIRA is different to that of government departments. PSIRA, as a schedule 3 public entity, does not receive funds from Government, but generates revenue through the collection of annual and registration fees from private security businesses and security officers, as mandated in section 3 of the Private Security Industry Regulation Act (2001). The financial position of PSIRA is measured on potential revenue.

 

National and provincial governments are on a modified cash basis of accounting, while local authorities and public entities use accrual accounting. Accrual accounting is best defined as “when transactions are recorded in the books of accounts as they occur even if the payment for that product or service has not been received or made. This method is more appropriate in assessing the health of the organisation in financial terms”. Furthermore, accrual accounting records revenues and expenses when they are incurred, regardless of when cash is exchanged. The term "accrual" refers to any individual entry recording revenue or expense in the absence of a cash transaction.

 

Total expenditure is projected to increase at an average annual rate of 10.1 per cent, from R452.7 million in 2023/24 to R605 million in 2026/27. Spending on Compensation of employees accounts for an estimated 48.6 per cent (R1.1 billion) of the Authority’s total spending over the MTEF period. The number of personnel is expected to increase from 390 in 2023/24 to 407 in 2026/27 as the Authority fills critical vacant positions.

 

More than 90 per cent (R2 billion) of the Authority’s revenue over the MTEF period is set to be generated through the collection of annual and registration fees from private security businesses and security officers. The remainder will be generated through sales of renewal certificates, the training of security officers and accreditation fees collected from training providers. Revenue is expected to increase in line with expenditure, mainly due to the anticipated increase in the registration of security officers from 180 000 in 2023/24 to 216 000 in 2026/27.

 

In 2024/25, the Authority’s projected budget is R544.5 million, which is a nominal increase of 20.3 per cent, or R91.8 million compared to the previous financial year. The Administration Programme has a budget of R309.4 million in 2024/25, which is a nominal increase of 25.49 per cent compared to the previous financial year. The Law Enforcement Programme has a budget of R161.9 million, which is a nominal increase of 15.9 per cent compared to the R138.7 million budget of the previous financial year. The Communication and Training Programme has a budget of R46.9 million in 2024/25, which is a nominal increase of 10.86 per cent. The Registration Programme’s budget increased from R25.2 million in 2023/24 to R26.3 million in 2024/25, which is a nominal increase of 4.53 per cent, while considering inflation, the allocation shows a slight real decrease of 0.19 per cent.

 

 

Table 1: PSIRA expenditure trends and estimates by programme

Programme

Budget

Nominal Increase / Decrease in 2024/25

Real Increase / Decrease in 2024/25

Nominal Percent change in 2024/25

Real Percent change in 2024/25

R million

2023/24

2024/25

 

 

 

 

Programme 1: Administration

  246,6

  309,4

  62,8

  49,0

25,49 per cent

19,86 per cent

Programme 2: Law Enforcement

  138,7

  161,9

  23,2

  15,9

16,74 per cent

11,50 per cent

Programme 3: Communication and training

  42,3

  46,9

  4,6

  2,5

10,86 per cent

5,89 per cent

Programme 4: Registration

  25,2

  26,3

  1,1

  0,0

4,53 per cent

-0,16 per cent

TOTAL

  452,7

  544,5

  91,8

  67,4

20,3 per cent

14,88 per cent

Source: National Treasury (2024)

 

4.Performance indicators

 

In 2024/25, the Authority has 23 performance indicators, of which some targets were increased/improved compared to the previous financial year. 

 

4.1.Programme 1: Administration

 

This programme is responsible for the overall coordination of all efforts and activities of the Authority towards the achievement of the strategic goals and achieving organisational success, the financial management of the Authority and providing institutional support and services to the other programmes. It is also responsible for institutional reporting, management processes and systems to track performance against each of the strategic objectives.

 

This programme has the following subprogrammes:

 

  1. Finance subprogramme: Provides financial management, support and reporting. Facilitation and coordination of internal audit and risk management.

  2. Corporate Services subprogramme: Provides human resource management services and support; Provides business and information technology services and support; and provides legal services and support, and ensures legislative compliance.

  3. Operations subprogramme: Conducts research about private security to inform development of policy, regulations and standards.

 

In 2024/25, the Administration Programme has nine performance indicators, of which most targets remained unchanged compared to the previous financial year. 

 

Table: Programme Performance Indicators and Targets: Administration Programme

Outputs

Performance Indicator

2023/24 Target

2024/25 Target

Subprogramme: Finance

Revenue collection

Percentage of billed revenue collected

80% revenue collected on billed annual fees

80% revenue collected on billed annual fees

Audit Action Plan (AGSA) and Internal Audit findings

Percentage implementation of the Audit Action Plan

100% implementation

100% implementation

Subprogramme: Corporate Services 

Business process digitised

Percentage implementation of digital business strategy and implementation plan

100%

10% implementation

Human Resources management and development

Percentage of the vacancy rate against the approved funded positions

Not more than 7%

Not more than 7%

Percentage of employee performance rating assessed at 3 and above as per Performance Management System

95% of assessed employees perform on rating of 3 and above

95% of assessed employees perform on rating of 3 and above

Developed security sector regulations and standards

Number of security sector regulations and standards developed

1 draft regulation approved by Council

1 draft regulation approved by Council

Unchanged

Subprogramme: Operations - Research and Development

Completed research reports, surveys and policy documents

Number of relevant research reports completed

5 research reports

Remained unchanged at 5 research reports

Number of completed surveys

4 surveys

Remained unchanged at 4 surveys

Number of A.I monographs completed

New Indicator

1 A.I monograph completed

PSIRA 2024/25 APP

 

4.2.Programme 2: Law Enforcement 

 

This programme is responsible for ensuring that industry players operate and comply with regulations and standards and take appropriate action where violations occur. This programme consists of the following sub-programmes:

  • Compliance and Enforcement subprogramme: Provides inspections and investigations to verify whether the industry complies with regulations and standards.

  • Prosecutions subprogramme: Prepares and presents evidence about improper conduct by the industry participants.

  • Operational management subprogramme: Provides regional capacity.

 

In 2024/25, the Programme has five performance indicators, including the following:   

 

Table: Programme Performance Indicators and Targets: Law Enforcement Programme

Outputs

Performance Indicator

2023/24 Target

2022/23 Target

Subprogramme: Compliance and Enforcement

 

 

Industry inspections 

Number of security businesses inspected to enforce compliance with the PSIRA Act (2001)

5 650

5 975

Number of security officers inspected to enforce compliance with the PSIRA Act (2001)

30 640

30 640

Security businesses licenced for firearms inspected

Number of security businesses licensed to possess firearms inspected

1 800

1 800

Investigations finalised

Percentage of complaints finalised against non-compliant Security Service Providers (SSPs)

90%

90%

Subprogramme: Prosecutions

Improper conduct enquiries prosecuted

Percentage of cases of non-compliant Security Service Providers (SSPs) prosecuted per year

92%

95%

PSIRA 2024/25 APP

 

4.3.Programme 3: Training and Communications

 

The Training and Communications Programme is responsible for the content and quality of the training offered in the industry and for communicating knowledge about the industry and sharing consistent information, results and relevance of the Authority. The programme has six performance indicators in 2024/25, including the following:

 

Table: Programme Performance Indicators and Targets: Training and Communication Programme

Outputs

Performance Indicator

2023/24 Target

2024/25 Target

Sub programme: Training

Accreditation

Number of accredited instructors monitored and audited

300 instructors

400 instructors

Accreditation of Qualifications

Number of qualifications accredited

10 qualifications

12 qualifications

Online assessment system training

Number of online assessment system training provided to the accredited training providers 

New indicator

25

Sub programme: Marketing, Communications and Stakeholder relations

Stakeholder relations

Number of new co-operation agreements entered into with industry regulatory bodies in other countries

1 new corporate agreement entered into

1 new corporate agreement entered into

Marketing and communication

Number of external stakeholder awareness workshops conducted

70 stakeholder

awareness

workshops

conducted

80 stakeholder

awareness

workshops

conducted

Marketing and communication

Number of marketing campaigns held

25 marketing

campaigns

35 marketing

campaigns

Source: PSIRA 2024/25 APP

 

4.4.Programme 4: Registration

 

In 2024/25, the Registration Programme has three performance indicators, including the following:

 

Table: Programme Performance Indicators and Targets: Registration Programme

Outputs

Performance Indicator

2023/24

Target

2024/25 Target

Registrations

Average turnaround time for implementing registration committee resolutions for individual applications with an illicit activity

7 days

5 days

Number of active registered security businesses on the database reviewed.

1 500

2 000

Number of active registered security officers on the database reviewed.

29 000

30 450

Source: PSIRA 2024/25 APP

 

5.Committee Observations

 

The Committee made the following observation during the 2024/25 PSIRA budget and APP hearing:

 

  1. The Authority was commended for their commitment to the development of Information, Communications and Technology (ICT) platforms and models to digitise the regulation of private security service providers.  

 

  1. The Committee requested the dates on which the Northern Cape and the North West Provincial Offices will be opened. The Authority indicated that the offices will be operational in the 2025/26 financial year.

 

  1. The Committee raised concern about the involvement of private security service providers in acts of extortion in the construction sector. The Authority noted that they had a meeting with Master Builders of South Africa, where these issues were highlighted.

 

  1. The Committee questioned the timeframe in which compliance inspections are conducted from when complaints are received. The Authority indicated that inspections are immediately actioned after receiving complaints. The Authority highlighted capacity constrains to action inspections and noted that targeted operations will be implemented to focus on extortion in the built environment and so-called protection gangs. The Authority further noted that Inspectors need investigative powers to strengthen PSIRAs authority in the regulation of private security service providers.

 

  1. The Committee noted that many businesses employ security guards who are not registered with PSIRA and questioned the plans that are in place to address this situation, The Authority indicated that regular inspections are conducted but is hampered by a lack of sufficient capacity. The current capacity ratio of PSIRA is one Inspector to 200 security companies (1:200) whereas the ideal would be 1:110 companies.  To attain the ideal ratio, 66 additional Inspectors need to be appointed, which is not possible under the outdated funding model. The Authority noted that the funding model must be changed or that PSIRA could possibly to be funded by appropriated funds.  

 

  1. The Committee questioned the financial stability of PSIRA and asked why they do not budget for a surplus. The Authority stated that the revenue stream must break even and that they are allowed to generate a surplus. The 20% increase in expenditure is over the medium term and not annual.

 

  1. The Committee raised concern about Government Departments not paying security service providers adequately and often lower than the minimum required, The Authority stated that this is a major concern and that PSIRA has published pricing guidelines. Unfortunately, Government works on a tender-basis for the procurement of security services and the lowest tender must be accepted leading to security guards not being paid fairly.

 

  1. The Committee raised concern about the employment of foreign nationals as security guards in the entertainment sector, especially at nightclubs. The Authority stated that regular inspections are done at nightclubs and that foreign nationals are arrested when working as security guards as this is illegal under current legislation. The Authority further noted that legislations allow for persons with permanent residency to be employed as security guards. 

 

  1. The Committee stated that synergy is needed between on the training and accountability of private security guards. Security guards are often armed with high calibre firearms and often intimidate citizens. Mention was made of the July 2021 Unrest where private security companies replaced the role of the South African Police Service (SAPS) in protecting people and property. The Authority noted that they have submitted Regulations to the Minister of Police to strengthen the control of firearm in the private security industry.

 

The Regulations seeks to prohibit firearms being displayed in public spaces and limit the use of semi-automatic firearms to specific categories of the guarding sector such as Cash-in-Transit, anti-poaching and the protection of national key points. The Authority further noted that they must control all training and that security guards are not trained as first responders to public protests and are not allowed to operate in this space. Mention was made of the incident that occurred in the White River-area in which Libyan nationals were receiving military training.

 

6.Committee reommendations

 

The Portfolio Committee recommends the following:

 

  1. PSIRA should continue and increase their targeted inspections on 1) the employment of foreign nationals by private security service providers; 2) private security service providers involved in extortion; and 3) the exploitation of private security guards.

 

  1. The Minister of Police must, at the Executive Level, address the unfair payment of security guards employed by government Departments. This should ideally result in a Cabinet resolution calling for the adherence to the pricing scheduled published by PSIRA for all government tenders relating to the procurement of private security services.

 

  1. PSIRA must submit a report, no later than one month after the adoption of this report, on all recent engagements with National Treasury on possible solutions to the current funding model of PSIRA. The report should include ways in which the Committee can assist PSIRA in these endeavours.       

 

7.Conclusion

 

The Committee welcomed the Authority’s report and expressed appreciation for its continuous outstanding performance. The Committee encouraged the Authority to continue to uphold high standard and performance to effectively regulate the private security industry in South Africa and root out all unscrupulous companies from operating in this environment.

 

Report to be considered.