South Africa To Crackdown On Underground Economy

The government is looking to attract and develop specialists and sophisticated technologies to tackle the illicit economy, estimated to be about R178 billion, says Minister of State Security Siyabonga Cwele.

Cwele, who was addressing a media briefing before delivering the department’s Budget Vote in Parliament today, said his department would be working with other departments that make up the economics cluster to crackdown on illegal practices such as smuggling or so-called round-tripping of goods, as well as the production of counterfeit goods.

He said the illicit economy cost the country an estimated 10% of its gross domestic product and is concentrated in both the formal and informal sectors of mining, textiles and tobacco industries.

“This has a direct threat to job creation. It is a direct threat to our New Growth Path, because it means those who are doing business correctly can’t compete with those doing those fraudulent activities,” said Cwele, adding that illicit economic activities were often coupled with human trafficking and drug smuggling.

The department’s director general, Mzuvukile Maqetuka, said an investigation by the department last year revealed that the country lost between R5 billion and R6 billion in gold mining.

Maqetuka said the R178 billion might not be the final figure, and that the size of the illicit economy might be even bigger.

Turning to the Information Bill, which is before Parliament, Cwele said the defence of using certain classified information because it was in the public interest to do so, did not always carry weight as it could be used an excuse for anyone to leak protected information.

“Every official that leaks a document, every official that does a wrong thing, will say ‘I thought it was in the public interest’, which means everything will have to go to court to determine that,” he said.

He said the deadline for the bill to be passed had been set by Parliament and added that there was no haste to enact the legislation.

“Really, if there is that (haste), we will not support that, because we would like all the stakeholders to engage,” he said, adding that most of the criticism of the bill raised recently by Cosatu, had been addressed.

He pointed out that the Information Bill, once enacted could protect the country from the theft of certain technologies or the breach of databases such as the recent hijacking of company details at Cipro.

Speaking about Libya, he said the South African government was calling for the cessation of all hostilities.

He said both parties in Libya – Muammar Gadaffi’s government and the rebels – were confident that the South African government was engaging with them to resolve the conflict there.

Security experts and those working with the UN met in Egypt last Sunday to discuss terms for any ceasefire and to develop a credible monitoring mechanism if a ceasefire was put in place, he said.

He said South Africa was one of the most stable democracies in Africa, if not the world, but this didn’t mean the country didn’t have threats – in particular economic migrants.

The department would also work help in setting up the Border Management Agency – which would be fully set up by 2014.

The department wants to integrate border security, as Cwele said information is currently shared in an ad hoc way, adding that this had only been strengthened during and before the World Cup with the South African Revenue Service and the Department of Home Affairs’ border control system which ran during that time.

His department is studying best cases and he said the UK had a fully-integrated model of border control.

Cwele said his department had embarked on a restructuring process, which would create about 300 job opportunities this year in areas of analysis, vetting, economic intelligence, border intelligence and information and technology security.