beyondbrics

Take a stroll through one of Johannesburg’s wealthy northern suburbs, and you see a range of architectural styles among the lavish homes of the country’s business elite. But virtually every one will be surrounded by a perimeter electric fence, and have a sign on the wall warning potential intruders of an “armed response” by a private security team.

With the security industry worth an estimated R14bn ($1.9bn) a year in South Africa, it’s not just the rich and famous who are buying in.

Security companies saw a boom during the World Cup – protecting national football teams at their training camps across the country (as pictured). But middle class families are the real reason for growth in the sector, as they dig into their wallets to get the same features – even in the largely impoverished townships – one can spot the better-off households (identified by the fearsome fences that surround them).

It’s one reflection of the steady emergence – helped by affirmative action policies – of a black middle class, which is expected to become an increasingly important driver of economic growth. Security spending, says Frans Cronje, deputy chief executive of the South African Institute of Race Relations, is “a very good indicator of wealth”.

Researchers say many families on modest incomes see security as a top priority, often cutting back on food and lifestyle expenses to pay for it.

Richard Scholes, head of the electric fence company Electerrific, says demand for his fences – which cost about R7,500 ($1,000) for a typical home – has been rising consistently over the last ten years. There was a spike in interest from lower income households in the last two years, he says, as fears about crime grew amid the trauma of the country’s recession.

The rising outlay on private security seems rooted in a lack of confidence in the police force. Although the overall crime rate has fallen by nearly a quarter since 2002, the number of violent domestic and business robberies has risen, and the police force has a growing reputation for corruption – not helped by the recent conviction of former top cop Jackie Selebi.

Nervous South Africans have fuelled a huge rise in the number of active security officers – from 115,331 in 1997 to 375,315 last year. That is roughly double the size of the police force, according to police minister Nathi Mthethwa, who has launched a committee to look into the issue.

Having flourished as a result of the police’s weakness, spending on private security is now helping to worsen the problem, Cronje says. “The private security industry is developing into an investigative service, following up on crimes for wealthy households, businesses and residents associations. The police’s detective and forensic capability has been badly eroded as top investigators are snapped up by the private sector.”

One such investigator is Bushie Engelbrecht, who left the Gauteng Police Service to join the private security firm CSS. “They certainly pay more than the police,” he says. Households typically pay CSS R400-700 ($55-$95) a month, in exchange for a guarantee that armed men – usually with a police or military background – will arrive within minutes of a call. Investigators like Engelbrecht are available to follow up if the intruders escape.

“What happens now is that there’s a spillover of crime,” he says. “If we’re successful in a suburb, the crime moves into the next neighbourhood – and then they require our services too.”

It is lucrative work for skilled employees like Engelbrecht. But the guards stationed at lookout posts on street corners are typically poorly compensated for the risks they take, and certainly don’t get enough to contemplate buying more security for their own families.

Given South Africa’s chronic unemployment problem, many guards have little alternative. And given their wealthier compatriots’ unyielding distrust of the police, it looks like spending on their services will continue to grow.

This post is part of a two-week special series on emerging market consumers.

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