Of the 201 executive directors of JSE-listed IT companies, only three are black. In addition, previously disadvantaged individuals own less than 10% of IT companies` equity.
Research company Empowerdex has released the results of a survey of the status of black empowerment in the sector.
It shows that there is only one executive chairman/CEO classified as a previously disadvantaged individual - Gary Morolo of Datacentrix. There are no key executives (CFO or COO) and only two other executives.
The report covers the IT hardware, software and services, electronic and electrical equipment and telecommunication services sectors, but separates the latter sector because it is dominated by two black empowerment companies - Johnnic and M-Cell.
Including non-executive chairmen (three are black) and non-executive directors (23 are black), previously disadvantaged individuals account for 29 directors or 8.1% of the total number of directors of JSE-listed IT companies.
The Empowerdex report excludes companies suspended by the JSE, as well as Crux. "Although Crux is governed by a board of directors that boasts significant BEE [black economic empowerment] control, it was excluded due to the recent sale of its core operations," it says.
BEE owners, including government pension funds, public sector pension funds and state-owned enterprises` pension funds, own R1.96 billion or 9.55% of the R20.49 billion IT sector.
However, only the top 11 companies in the ranking by BEE ownership have BEE ownership of more than 10%. The majority (26 companies out of 42), show BEE ownership at less than 5%.
Five percent is the minimum level of ownership required for a company to be "black influenced" according to the definition of the Black Economic Empowerment Commission`s (BEECOM`s) report.
The top 10 companies by investment value account for almost 90% of the BEE investment in the entire industry, with Reunert alone attracting 23% of all BEE investment into IT, while Dimension Data, Altech and Comparex individually account for more than 10% of total BEE investment in IT.
Who`s who
The BEECOM report specifies that a black-owned company must have BEE ownership and control exceeding 50%. A black-empowered company has more than 25% BEE ownership and control, while a black-influenced company has more than 5% BEE ownership and control.
According to Empowerdex`s analysis, there are no black-owned companies in the JSE IT sectors, three black-empowered companies (Datacentrix, Grintek and Digicore) and eight black-influenced companies (AST Group, IST, Spescom, Mustek, Altech, BTG, Reunert and Altron).
The remaining 31 companies have BEE ownership or BEE control at levels less than 5%, meaning that 73.8% of the IT companies listed on the JSE are not black owned, empowered or influenced.
Empowerdex says it has also identified the investment and skills requirements that may lead to the improvement in the sector`s BEE status in the short-term and over the long-term.
"A total investment of R18.9 million and the appointment of 10 experienced and knowledgeable PDI [previously disadvantaged individual] directors into selected IT companies can increase BEE representation to over 50% of the entire sector.
"The required investment to improve the BEE status of the industry in the long-term will be much higher due to the skills imbalances prevalent in the IT sectors.
"The industry should strive to train, develop and retain PDI professionals and middle managers that will lead to improvement in the BEE ownership and control of the IT sectors in the long-term."
Top 10
Top 10 listed IT companies by BEE ownership
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