South African financial sector faces growing cyber threats outpacing regulatory changes

The private security sector in South Africa has become one of the country's largest employers. Annually, businesses and households spend almost 87 billion rand on security services, video surveillance, armed response, and investigations, providing employment for about 383,000 people.

Employment Scale and Industry Growth

According to the latest industrial services report from Statistics South Africa, the investigation and security industry employed 382,670 people in 2024, making it the largest employer in the business services sector. This industry accounted for 18.9% of sector employment and showed a growth of 23% compared to 311,100 employees in 2020, which is the most significant increase among all surveyed industries.

Private security companies conduct patrols in residential areas, shopping centers, office parks, schools, hospitals, mines, and factories. Other companies provide armed response, electronic surveillance, cash transportation, and specialized investigation services.

Revenue Sources and Consumers

The main consumers of these services are businesses, which spent 66.3 billion rand on investigation and security services in 2024. Households contributed 11.6 billion rand, while government institutions and public bodies spent just over 7 billion rand.

Security and guard services generate the highest revenue, bringing in 34.8 billion rand, accounting for 43% of the total security revenue. Monitoring and surveillance services also made a significant contribution (17.9 billion rand), as did armed response and mobile patrolling (14.3 billion rand), cash transport operations (14.4 billion rand), and access control services (7.6 billion rand).

Reasons for Security Demand

Despite some crime categories improving—for example, apartment burglaries in residences decreased by 8.7% year-on-year, and robberies in dwellings decreased by 18.3%—the demand for private security remains high. A Governance, Public Safety and Justice Survey by Statistics South Africa showed that home invasion remains the most common crime in households, and many crimes are never reported to the police, which distorts official statistics.

The industry's revenue grew to nearly 87 billion rand in 2024, which is 29% higher than the 67.6 billion rand recorded in 2020.

Socio-economic Aspect of the Industry

Although the industry is the largest employer in the business services sector, it contributes only 4.7% of the total business services revenue, while its share of employment is 18.9%. This highlights the labor-intensive nature of private security. The average annual salary in the industry was 110,834 rand in 2024, less than half of the sector average of 241,722 rand.

Most workers are full-time employees (379,483 out of 382,670), with the vast majority being male (287,357 versus 95,313 women). Large companies employ 178,378 people, but small, medium, and micro-enterprises provide over 204,000 jobs.

According to TransUnion's Consumer Pulse Study (CPS) for the second quarter of 2026, South African consumers are grappling with rising inflation and declining financial optimism. Furthermore, 79% of respondents cited inflation as a major problem, forcing households to change their spending and borrowing habits to cope with financial pressure.

Financial Pressure on Households

Households in South Africa are experiencing significant financial strain as the cost of living continues to outpace income growth. The CPS study revealed that nearly four out of ten South Africans (39%) expect to miss at least one bill or loan payment in the coming months, highlighting the persistent impact of inflation on family finances.

The results indicate that despite adapting to difficult economic conditions, there is no widespread recovery. Instead, households are forced to make increasingly complex decisions as the pressure on purchasing power changes their approaches to spending, borrowing, and saving.

Erosion of Trust and Optimism

Ayesha Hatea, Director of Research and Consulting at TransUnion South Africa, notes that 'Consumers are still coping, but the margin for error is shrinking. Even a moderate increase in the cost of necessities forces difficult decisions, which is reflected in reduced confidence and more cautious credit behavior.'

Although the financial situation of households remains relatively stable compared to the previous year, confidence in the future continues to decline. The survey found that 43% of respondents feel their financial situation is better than expected, slightly lower than the 44% recorded in the second quarter of 2025. However, four out of ten consumers (40%) stated that their financial situation is worse than planned, indicating ongoing pressure on many families.

Financial optimism is also weakening: two-thirds (66%) of respondents are optimistic about their financial future, down from 71% the previous year, while the share of pessimists rose from 15% to 19%.

Income and Expenses

Income expectations are also falling. Seven out of ten South Africans forecast household income growth over the next 12 months, compared to 75% the previous year. However, the gap between earnings and the cost of living remains a serious issue: only 37% of respondents believe their income keeps pace with inflation, while 41% disagree.

It is unsurprising that rising prices for essential goods such as food and fuel rank among the top three problems for 79% of respondents. According to Hatea, inflation remains the biggest challenge for households. She emphasizes that 'even where incomes are growing, basic expenses quickly absorb that support. This makes budgeting discipline and financial literacy more important, as households need to know where they can adjust spending when pressure increases.'

Cutting Non-Essential Spending

Faced with increasing financial pressure, South Africans are tightening their household budgets and reducing spending on luxuries. More than half of respondents (53%) reported cutting non-essential expenditures in the last three months, including dining out, entertainment, and travel. Additionally, 28% canceled subscriptions or memberships, and 24% reduced or stopped spending on digital services such as internet, streaming platforms, and pay television.

The study also revealed various approaches to debt and savings. Nearly a third (32%) is accelerating debt repayment, and 27% are increasing contributions to reserve savings or stockpiles. One in five respondents reported increasing retirement savings. Nevertheless, not all households can strengthen their finances: fourteen percent are cutting pension savings, another 14% rely more on accessible credit, and 13% are using retirement savings to cover expenses.

Outlook and Credit Caution

In the future, consumers anticipate further increases in the cost of necessities. About 37% predict an increase in utility bills and loan repayments over the next three months, and a third expects higher medical expenses. While 36% intend to increase contributions to retirement savings or investments, 16% plan to reduce them.

Hatea concludes that 'These findings show how carefully households are trying to manage trade-offs. Some consumers are still building buffers and paying down debt, while others are using savings or credit to get through the month. Therefore, the overall picture is one of sustained financial adjustment, not simple improvement.'

Despite the financial pressure, access to credit remains an important part of financial planning. The vast majority of respondents (92%) believe that access to credit products is vital for achieving financial goals, which has not changed compared to last year. Perceived consumer access to credit is improving: 45% feel they have sufficient access to credit, up from 38% the previous year. Half of the respondents also believe they will be approved for a loan application.

However, improved confidence is not leading to increased demand. Only 36% of consumers plan to apply for new credit or refinance existing debt within the next year, remaining roughly unchanged from 2025. Among those considering taking out a loan but declining, 30% cite the cost of borrowing as the main reason. Credit history is a barrier for 23%, and concerns about income or employment for 22%.

Digital Finance and Risks

The study also points to the growing adoption of digital financial services. Among digital banking users, 46% bank with purely digital institutions, and 56% used 'buy now, pay later' services. Nearly a quarter (23%) also uses digital or fintech providers.

Nevertheless, the rise in digital participation is accompanied by growing concerns about fraud and cybercrime. Over half of respondents (56%) reported being targeted by online, email, phone, or SMS scams in the last three months. The most common type of fraud is voice phishing (vishing), affecting 34% of victims, followed by SMS phishing (smishing) at 33%, and email phishing at 31%.

Furthermore, 26% of respondents reported being informed that their personal information or online account data was exposed due to a data breach in the previous three months. Consumers are taking steps to enhance their online security: more than half (53%) change passwords in response to cybersecurity issues, 37% check their credit reports, and 12% purchase antivirus or internet protection software.

Seeking Financial Control

Despite the challenging economic environment, the study shows that South Africans are actively managing their financial well-being. More than a third (34%) monitor their credit reports monthly, 13% do so weekly, and 6% do so daily. More than half of respondents (52%) believe their credit score will improve if lenders consider additional financial information beyond traditional credit reports, including rent payment history, 'buy now, pay later' transactions, and short-term loan repayments.

Overall, the latest Consumer Pulse Study from TransUnion paints a picture of resilience tempered by growing financial constraints. South African households continue to adapt by cutting non-essential spending, managing debt more carefully, and seeking greater control over their finances; however, persistent inflation and the rising cost of living continue to test their ability to withstand further economic shocks.

The financial declaration system for public servants in South Africa, designed to prevent corruption and fraud, contains loopholes that allow assets and interests to be concealed. This is evidenced by the testimony of Dr. Albertus Schuman, a corruption and governance expert at the World Bank.

Identified Gaps in the System

Dr. Schuman testified before the Madlanga Commission on Thursday, discussing current disclosure regimes for senior officials within the Criminal Justice system and proposing necessary reforms to counter corrupt infiltration. According to the Public Service Regulations of 2016 (PSR, 2016), public employees are required to annually provide information on their financial interests either through a paper form or via the eDisclosure electronic system.

Schuman pointed out two main deficiencies: the exclusion of public servants' family members from the data disclosure system and the absence of mention of beneficial ownership in the declaration form.

Examples of Corruption Schemes

These remarks came after the commission heard information regarding how the suspended Deputy Head of the Criminal Intelligence Service, Major General Ferroz Khan, assisted businessman Ismail Wally in an SAPS vehicle parts tender, announced through the National Treasury in 2021. Subsequently, Khan received R150,000 in cash, luxury watches, and a V8 car from Wally. It was also established that the funds were transferred to the bank account of his minor son.

Schuman emphasized that the current form, structure, and disclosure requirements pertain only to the public servant themselves. He noted that international experience shows this is insufficient, as one simple way to hide wealth is by registering companies in the names of close relatives. Thus, concealing these assets in the existing system is not difficult.

Need to Include Family

The expert added that including family members in the declaration process is necessary because it does not require high moral sophistication to register a company in the name of a wife who may conduct business with the state, or in the name of children to register a car or property received as a gift in someone else's name.

He explained that failing to extend these requirements to close relatives facilitates the concealment of financial interests and assets. Furthermore, it negatively impacts conflict of interest management, where the state may remain unaware of the spouse's financial interests, for example, in medical supplies if the employee works in the Department of Health. In his words, this could potentially cause a direct conflict of interest that cannot be accounted for under the current regime, as such information is not required in the declaration form.

Asset Disclosure Problems

Schuman also noted that many countries have begun introducing requirements to expand such disclosures. Regarding the silence on beneficial ownership, he pointed out that it ignores several asset categories, including jewelry, livestock, works of art, precious stones, and cash held inside or outside financial institutions (such as safe deposit boxes, liquid savings, and bank accounts).

Moreover, the expert drew attention to the fact that the form does not account for virtual and intangible assets, such as cryptocurrencies and digital tokens, which can have significant value and facilitate the movement of wealth outside traditional channels. It was also observed that the form does not specify what debts are owed by declarants, only documenting their liabilities, which allows for masking the transfer of illegal cash into legal loans to third parties.

Details of the Khan Case

This week, the commission heard information that the 2021 declaration form showed Khan declared ownership of a Fiat Uno valued at R14,000 and income of R3 million from one of his spare parts companies. However, WhatsApp chats between Khan and Wally presented to the commission demonstrate that Khan discussed selling his M3, presumably a BMW M3 sports car worth R3.8 million, but this asset was not declared to his employer, SAPS.

The commission's head of evidence, Advocate Adila Hussain SC, expressed concern that Khan's additional income is two and a half times his annual salary as a public servant. In some 2021 chats, Khan informs Wally that he is delivering goods worth R10 million (10 bar) to his four spare parts stores, attaching photos of the interior of each store.

Hussain also noted that Khan's declaration of R3 million income from his company is ambiguous, as it does not specify whether this amount is salary or profit. Furthermore, in the 2023 form, Khan declared a fleet of 30 vehicles but did not provide an explanatory note on the origin of these vehicles, which calls into question the relevance of the declaration form.

Structural Issues and Recommendations

On Thursday, Schuman informed the commission that the fragmentation of the institutional structure for linking and verifying disclosure data creates inefficiency and undermines law enforcement effectiveness. He also pointed out the lack of a reliable sanctions regime to apply consequences for incomplete or false disclosure.

In Schuman's view, large-scale corruption, money laundering, and tax evasion cases often involve complex schemes where participants place their financial interests and companies in intricate legal structures. This makes it difficult for investigators to determine the ultimate beneficial owner of an asset or company, or who has direct control over them.

He recalled that many amendments introduced as part of reforms initiated by the Financial Action Task Force (FATF) when South Africa exited the grey list for anti-money laundering involved establishing registers of beneficial ownership in companies, relating to property, and defining the actual beneficial owner in the case of trusts.

Schuman warned that if the disclosure of beneficial ownership and interests in companies or property is not officially required, there is an opportunity to use nominee or intermediary structures to transfer everything to them so that the official can avoid declaring these assets since they are not in his name.

Concluding Comments

He also called for the use of the eDisclosure system. The commission's head of evidence, Matthew Chackalson SC, stated that implementing a comprehensive form would generally not affect public servants, as most of them have a limited range of income and assets. However, in his opinion, a comprehensive form is important to have enough information to identify individuals engaged in illicit enrichment and the concealment of these funds.

Chackalson added that while some people might have acted completely legally, disclosing all assets could be burdensome for reasons unrelated to corrupt income. But with the e-Disclosure system, it becomes a one-time burdensome process, and then the data can simply be imported. The problem will only be relevant during sharp changes in assets and income, and it is these cases that require close attention.