1. Tittle Goes here… Estimate costs Private Security Industry Regulation Bill,2012 7 November 2012 Estimate costs Private Security Industry Regulation Bill,2012 7 November 2012

2. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Introduction The cost estimation tabled in Parliament on 30 October 2012 with respect to the implementation of the Amendment Bill, took into account the following factors: Renewal of registrations post implementation of the Bill, in order to give effect to section 9 and 11 (limitation of foreign ownership and control); Capacity building in the law enforcement and compliance functions; National footprint, by establishing provincial offices in North West, Free State and Northern Cape; Design and implementation of an ERP software to support, operations, revenue management, decision making and reporting; Capital expenditure estimates with respect to procurement of business tools for the law enforcement and compliance unit, such as a fleet of vehicles used by inspectors in operations; 1

3. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Clauses 9 and 11 of the Bill deal with limitation of ownership and control by non- citizens of South Africa. Post implementation of the Bill, there will be a need to renew registrations of both security officers and security service providers (businesses). Section 22 of the principal Act provides as follows: “The Minister may prescribe procedures and principles in respect of periodic applications for the renewal of registrations by registered security service providers and the conditions and requirements for the granting of such applications”. To this end, capacity building, capital expenditure, national foot print of the Authority flows from implementation of clauses 9 and 11 2

4. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Baseline expenditure and revenue (R’000) 3 Total Expenditure per Programme 2012/20132013/142014/152015/162016/17 Programme 1 Law Enforcement66,03073,95080,75085,37589,593 Programme 2 Finance & Administration60,24755,77254,92955,97759,195 Programme 3 Communications & Training25,98427,54429,39430,76532,222 Programme 4 Corporate Services20,87622,04523,54023,69924,520 Total Expenditure 173,136179,310188,613195,817205,530 Revenue * 178,124181,131190,176198,289206,958 Surplus 4,9871,8211,5632,4721,428 * Including SO annual fees

5. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Estimated costs of Bill Implementation (R’000) 4 Total Expenditure per Programme 2013/142014/152015/162016/172017/18 Programme 1 Law Enforcement 6,541117,395105,891115,410118,415 Programme 2 Finance & Administration 15,54018,41812,8258,3909,027 Programme 3 Communications & Training 6,15620,33125,49728,77430,502 Programme 4 Corporate Services 09561,0321,1151,204 Revenue foregone Supplemented by State - -44,12346,32948,646 Total State funding required28,237157,100189,367200,018207,794

6. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Estimated costs of Bill Implementation (R’000) 5 Total Expenditure by Economic Classification 2013/142014/152015/162016/172017/18 Compensation to employees 052,44975,00295,872103,542 Lease payments 06,5177,1417,8288,610 Goods and services 6,42726,49327,75543,97646,996 Project expenditure (Renewal of Registrations) 050,26824,28300 Total Current Expenditure 6,427135,727134,182147,676159,148 Capital expenditure 21,81021,37311,0626,0140 Total expenditure 28,237157,100145,244153,689159,148

7. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Consolidated budget incl. Bill (R’000) 6 Estimates of revenue and expenditure 2012/132013/142014/152015/162016/17 Baseline expenditure173,136179,310188,613195,817205,530 Amendment Bill estimated costs028,237157,100145,244153,689 Total expenditure173,136207,548345,713341,061359,219 Baseline revenue178,124181,131190,176198,289206,958 Less: Revenue foregone000-44,123-46,329 Surplus / (Deficit)4,987-26,417-155,537-186,895-198,590 Proposed State funding028,237157,100189,367200,018

8. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Baseline revenue 7

9. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Implementation approach and plan As at October 2012, the PSIRA database had 2 112 636 registered security officers and 27 450 security businesses. Due to the large number of renewals that will be undertaken, the process is envisaged to take 24 months, from the date the Bill is put into operation. There are two approaches that can be adopted. i.e. registration will lapse on the month of birth of the security officer, or the month which the security officer’s registration was so registered prior to the Bill implementation. The above approach will ensure that there is proper scheduling of renewals and avoid influx of renewals. 8

10. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Benefits for renewal process Currently, security service providers are not classified and categorized in terms of section 2(1)(d)(i) of the Private Security Industry Levies Act, 23 of 2002 which provides as follows: Council may determine the amount of levies for different categories or classes of security service providers by having regard to th training level, position, functions or other classifications The renewal process will be an opportunity to classify security service providers to give effect to categorization and classification Improve operational efficiencies with respect to monitoring and control of criminality in the industry 9

11. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Resources required for renewal project Capacity building in the law enforcement and compliance functions; National footprint, by establishing provincial offices in North West, Free State and Northern Cape; Design and implementation of an ERP software to support, operations, revenue management, decision making and reporting; Capital expenditure estimates with respect to procurement of business tools for the law enforcement and compliance unit, such as a fleet of vehicles used by inspectors; 10

12. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Renewals project plan 11 ObjectiveStart dateCompletion dateResponsibilityOutcome Renew registrations of security officers (2.1 million) April 2014 September 2015 (April – September 2015 being grace period) PSIRA Security Officers PSIRA has a credible and updated database of security service providers Renew registrations of security businesses (27 450 businesses of which 9 770 are actively operating) April 2015March 2016PSIRA and Security businesses PSIRA has a credible and updated database of security service providers

13. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Renewals project assumptions 50% of the total Security officers and businesses on the registrations database will respond to the renewal process. The total number of renewals for security officers is estimated to be 1 056 318 The total number of renewals for security businesses is estimated to be 13 725 12

14. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Renewals project estimated costs (R) 13 ActivitiesCost driverResources2013-142014-152015-16 Renewal of registration for Security Officers Number of security officers Registration personnel, ERP software, Provincial offices, Inspectors, Fleet of vehicles 050,267,53324,283,405

15. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Renewals project estimated costs 14 ActivitiesCost driverResources2013-142014-152015-16 Printing and Issuing of new ID Cards 0 3,961,1931,320,398 Printing and Issuing Certificates 0 7,922,3852,778,045 Criminal records verifications 0 38,383,95512,794,652 Travel, subsistence and accommodation (Infrastructure assessment) 0 07,390,310 Total project costs 050,267,53324,283,405

16. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Capacity building Lack of capacity mainly on human capital has been a deterrent to the Authority’s effectiveness to regulate the private security industry. Lack of capacity is best illustrated by the ratio of inspectors to security service providers that are actively operating in the industry. The following table depicts number of inspector geographically, relative to the number of security service providers in a particular province. 15

17. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 16 Current Ratio Current number of inspectors Number of registered businesses * Number of registered SO's * Current Ratio Inspector to Businesses Current Ratio Inspector to Security Officers Gauteng73,471173,26949624,753 Limpopo31,19329,3753989,792 North West340626,1891358,730 Free State229016,8041458,402 Northern Cape11254,3781254,378 Mpumalanga369328,2502319,417 Kwazulu Natal81,62470,9952038,874 Eastern Cape672336,3791216,063 Western Cape81,01741,2931275,162 Total419,542426,93223310,413 * Excludes registered security service providers that are registered but not actively participating in the industry

18. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Capacity building Firstly statistics show that on average for each inspector currently employed by the Authority, there are 233 security businesses Secondly, for each inspector currently employed, there are 10 413 security officers in the industry The consequence of such a large ratio, is that very few businesses are inspected annually, which increases the risk of non-compliance, exploitation of labour, and criminality in the industry. Lack of visibility by the law enforcement division also has an impact on revenue collection, since some businesses misrepresent their payroll numbers in order not to pay the appropriate annual fees to the Authority Without the capacity proposed, the Authority cannot implement sections 9 and 11 of the Bill 17

19. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Proposed additional inspectors and prosecutors 18 Proposed additional inspectors2014/152015/162016/17Total Gauteng1718 53 Limpopo66517 North West2114 Free State2114 Northern Cape20 2 Mpumalanga3339 Kwazulu Natal77620 Eastern Cape4217 Western Cape43310 Total474138126 Proposed additional prosecutors95317

20. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Cost of compensation per programme 19 Programme 1 - Law Enforcement in Rand2014/152015/162016/172017/182018/19 Compensation to employees 38,156,085 57,429,978 76,618,468 82,747,946 89,367,781 Additional employees including administrative staff155514300 Incremental head count155206249 Average cost per unit246,168278,786307,705332,321358,907

21. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Cost of compensation per programme 20 Programme 2 - Finance & Administration2014/152015/162016/172017/182018/19 Compensation to employees5,965,8036,443,0676,958,5137,515,1948,116,409 Additional employees including administrative staff270000 Incremental head count27 Average cost per unit220,956238,632257,723278,341300,608

22. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Cost of compensation per programme 21 Programme 3 - Communications & Training2014/152015/162016/172017/182018/19 Compensation to employees7,381,03110,107,39611,191,87412,087,22413,054,202 Additional employees including administrative staff255100 Incremental head count253031 Average cost per unit295,241336,913361,028389,910421,103

23. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Cost of compensation per programme 22 Programme 4 - Corporate Services2014/152015/162016/172017/182018/19 Compensation to employees946,1131,021,8021,103,5471,191,8301,287,177 Additional employees including administrative staff40000 Incremental head count44444 Average cost per unit236,528255,451275,887297,958321,794

24. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 National foot print Additional provincial offices in North West, Free State and Northern Cape are proposed to be established. Furthermore, Limpopo and Mpumalanga provinces which currently have walk in centres are proposed to be capacitated in order to provide a fully fledged service which includes the law enforcement functions. 23 ObjectiveStart date Completion date ResponsibilityOutcome Establish provincial offices in North West, Free State and Northern Cape, Limpopo and Mpumalanga September 2013 March 2014PSIRA Supply Chain Facilities Management PSIRA has national foot print

25. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Estimated costs of National foot print (R’000) 24 Province2014/152015/162016/172017/182018/19 Mpumalanga1,4401,5841,7421,9172,108 North West9601,0561,1621,2781,406 Northern Cape9601,0561,1621,2781,406 Limpopo1,9202,1122,3232,5562,811 Free state9601,0561,1621,2781,406 Rental of Multi Function Devices277 305 Total rental costs6,5177,1417,8288,6109,441

26. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 Capital expenditure (Rand) 25 Capital Expenditure2013/142014/152015/162016/172017/18 Fleet (Motor vehicles)6,270,0005,583,6005,260,4645,265,5960 Number of vehicles292421190 Average cost per unit216,207232,650250,498277,1370 IT Infrastructure1,540,0500000 Computer hardware0963,792801,783748,1430 ERP Software14,000,00011,000,0005,000,00000 Office equipment0250,250000 Office furniture03,575,000000 Total Capital Expenditure21,810,05021,372,64211,062,2476,013,7390

27. PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012 ERP software development (Rand) 26 ERP Development costs 2013/142014/152015/162016/172017/18 1. Estimated Application (ERP/CRM) R 7 000 000 2. Software development and Customization R 3 000 000R 1 500 000 2.1 Integration***includedIncluded 2.2 Data Conversion**includedIncluded 3. TestingR 900 000R 2 000 000 4. Implementation and Training Costs R 4 500 000R 1 500 000 5. Project Management Cost @ R1500 per hour R 900 000R 1 600 000R 2 500 000 6. Business Process alignment R 800 000 7. Hardware Costs (Server 6 TB of HDD + 32GB of RAM, 8 core processor) R 1 500 000 R 600 000 8. Hardware Support Fee 4*24*7includedIncluded included 9. Software License Support Fee R 320 000R 336 000R 352 800R 370 440 10. SundriesR 700 000R 600 000R 400 000 Total Cost per yearR 14 000 000R 11 320 000R 5 336 000R 352 800R 370 440

28. Tittle Goes here… THANK YOU