With the Information and Communication Technology (ICT) sector set to experience high growth rates, the implementation of the ICT Black Economic Empowerment (BEE) Charter is critical, yet it is currently unclear when the charter will come into operation.
Mthunzi Mdwaba, president of the Black IT Forum and part of the working group responsible for drawing up the charter, responded with ”Your guess is as good as mine” when questioned about when the charter was likely to come into operation.
Mdwaba said the charter was handed to the Minister of Communications Ivy Matsepe-Casaburri at the end of April, in late May the draft went before Cabinet and was to be prepared for 60 days of public circulation.
”That was the last we heard. Rumour has it that it will be out soon,” said Mdwaba.
A Department of Communications’ spokesperson said the charter is awaiting the Department of Trade and Industry’s codes of good practice for rationalisation.
The first phase of the codes is also awaiting approval from Cabinet and the second phase is yet to start. At the current rate, the codes are unlikely to be finalised until the end of next year.
The ICT sector has been identified in numerous government strategic documents as a key driver of the South African economy and in a recent report prepared by BMI TechKnowledge is expected to grow at a compound annual growth rate of 6,5% to become a R62,9-billlion industry by 2009.
According to the report, South African IT Market Sizing and Forecast, 2004 to 2009, the local IT market grew by 8,5% in 2004 to reach the R45-billion mark and is expected to grow at a rate of 7,4% in 2005.
The draft commits the sector to a number of targets, including an equity target of 30%, or a total BEE stake in excess of R7,5-billion. It has become a major sticking point with certain multinationals that are bound by intellectual property restrictions from parent companies to sell equity stakes to empowerment partners.
The draft charter has addressed these issues by stating that an ICT enterprise will have to prove that selling equity stakes will result in commercial harm as a result of legal, technological or policy barriers before they can get exemption. However, multinationals that are granted exemptions will have to compensate by aggressively pushing areas such as enterprise development.
IBM director for BEE and corporate affairs, Jimmy Manyi, said the company believes that selling equity stakes is a good thing and that the company is relieved that there is no blanket exemption for multinationals.
”The ICT charter architects must be hailed for this, as this will allow companies such as IBM to continue to make a meaningful contribution in this country,” said Manyi.
Managing Director of Microsoft South Africa, Gordon Frazer, said he supports the decision to find alternatives to the sale of equity. ”We believe that exploring alternatives to selling equity encourages multinationals to find innovative ways to make a difference in furthering the transformation in the ICT industry in this country.
”We have never sought an exemption from the obligations of BEE and this approach allows us to work to find an appropriate solution,” said Frazer.
The draft charter sets a target of 50% black employees in senior management, 30% of whom should be women. While a target of 65% has been set for black employees in other management positions, again with 30% set aside for women. In addition, the charter has set a target of 60% black people in the governing body with black women making up half of that. The charter does not set dates by which targets must be reached, but states these are valid until 2015.
Mdwaba said that the skills pool of black IT professionals is limited and for this reason the charter seeks to reward companies who contribute to the growing of the skills pool.
ICT enterprises will be expected to address skills development through the commitment of 2% of their payroll for investment in skills development, in addition to the skills development levy. They will also be required to provide learnerships equivalent to 5% of employees.
ICT enterprises will have to acquire 70% of their procurement needs from BEE companies with 30% of being from from small- medium- and micro-enterprises (SMMEs). They will also have to offer favourable payment terms of 15 days or less for SMMEs.