The long-awaited ICT charter, which seems to have disappeared into thin air about eight years after being mooted, is stalling empowerment within the sector, say market commentators.
The much-anticipated charter has been dogged by delays since 2003, when the process of launching the paper started. Several “final” documents have been released, but the charter has yet to be gazetted by the Department of Trade and Industry (DTI), apparently because not all the industry players have reached agreement.
Andile Tlhoa'ele, empowerment proponent and CEO of Inforcomm, says it will be at least five years before the economy sees the benefits of the charter, and it is unlikely to be gazetted this year. He has heard that many companies are delaying empowerment deals because they do not have certainty about what the requirements would be.
“The fact that the charter is not finalised is holding back empowerment. The draft is being reviewed, but as long as it is not final, there is no clarity for companies,” says Tlhoa'ele. However, the exact impact of the delay is difficult to measure, due to the uncertainty around what the charter will require.
Recently, several listed companies such as Business Connexion, MTN and Vodacom have implemented empowerment deals.
Tlhoa'ele explains that companies that are implementing empowerment deals are complying with the DTI's Codes of Good Practice. However, these codes are generic and do not address issues that are specific to the ICT sector, he says.
Industry-specific issues that need to be addressed and measured include procurement, skills transfer and enterprise development, says Tlhoa'ele. He explains that the lack of a charter means these key empowerment aspects cannot be measured, because there is nothing against which to measure them.
No pressure
Motse Mfuleni, secretary general of the Black IT Forum, says there is no pressure on the industry to drive empowerment deals. He says, as a result, companies in the sector are being driven by external factors such as their clients.
law, which is hampering empowerment. “For how long are we going to be blaming industry for not transforming?”
As a result of the delayed document, he says, industry is doing its own thing because there is no leadership. “If I am not given pressure, I am going to do what suits me as a private company.”
Adrian Schofield, president of the Computer Society of SA, says if the steering committee's original goals had been met, the charter would have been in place and directing strategy for five years. He says many companies have put off doing deals, because there is no charter to guide them.
Schofield does not have specific examples of firms that have avoided transforming, but says there is much anecdotal evidence to indicate that many organisations in the ICT sector are still in the hands of whites.
In addition, he says, even if the charter were signed into law tomorrow, many aspects would be outdated, such as the R7.5 billion suggested cap for empowerment deals. MTN's recently announcement empowerment deal is worth R8.1 billion, for example.
“The socio-economic circumstances in 2010 are quite different from the ones in 2002/3, when the groundwork was being done on the charter,” says Schofield.
Client-driven
Kaplan Equity Analysts MD Irnest Kaplan says listed companies are doing empowerment deals and the sector has recently seen transactions being reworked, such as Business Connexion's announcement that it was increasing its empowerment stake to 30%.
Kaplan says “listed companies are going ahead with their plans without worrying about the charter”. However, he suspects that smaller companies, which are not under as much pressure from clients to be empowered, could be holding back until there is clarity.
He says if the hold up in the gazetting of the charter is delaying skills transfer, then this is bad for the sector in the longer term.
The DTI's chief director of BEE Nomonde Mesatywa was not immediately available for comment this morning.
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