The significant differences between the black economic empowerment charters published to date are making companies in industries without charters reluctant to embark on BEE initiatives.
Four charters have been published covering the fuel and chemical, mining, maritime and financial services industries. A fifth, covering the ICT industry, is in draft form and is expected to be finalised shortly.
According to Soria Hay, executive director of integrated equity and debt company Bravura, which specialises in BEE transactions, many companies are uncertain about what the requirements will be in their industries and are thus hesitant to act until their charter is published.
"We have found that some of our clients don`t know whether to move or sit tight and are reticent to start transforming until they know what they are transforming towards," she says.
Hay says that some of the differences between the various charters are substantial, both in terms of their overall approach and in terms of detail.
A glaring difference between the financial services charter and the third draft of the ICT charter, for example, is the exemption of international companies from equity ownership targets. The financial services charter exempts internationals whereas, so far, the ICT charter does not.
"From an international perspective, this is embarrassing and could signal that SA is more encouraging of investment in the financial services industry than the ICT industry."
She says members of the ICT charter workgroup have gone so far as to state publicly that if multinationals are unhappy about not being exempted, they are welcome to divest.
"It`s incomprehensible why the workgroup of the ICT charter is taking such a hard line on this issue, particularly when this industry has been identified by government as being of strategic importance to our economy."
Commenting further on the ICT charter, Hay says that, overall, it is much more aggressive than the financial services charter.
For example, its ownership and employment equity targets are higher. In addition, the draft of the ICT charter does not allow companies to be exempted from any of the categories prescribed, whereas the financial services charter prescribes a process of applying for exemption to the Charter Counsel (which still needs to be established).
Because they do business in this country through a branch and not through a separate company, some multinationals are restricted from selling equity to a BEE - or any other - player. In terms of the ICT charter, such a multinational will be scored zero out of 20 for ownership. Assuming that it scores 100% in all the other categories, it follows that the company will end up with an 80% score overall.
In terms of the financial services charter, on the other hand, a multinational can apply for exemption from the ownership category. Should it score 100% in all the other categories, its overall score would be 100%.
Hay questions the reasons behind the aggressive stance taken by the compilers of the ICT charter, as the ICT industry is actually much further down the line from a BEE perspective than most.
"The workgroup seems to feel that, while the ICT industry has transformed more quickly than the financial services industry, for example, its targets still need to be a stretch. At Bravura, we think this is wrong - it`s tantamount to penalising the industry for having done well."
In turn again, the financial services charter`s procurement computations are stricter.
Hay says the problem of uncertainty with regard to what the approach of new charters in other industries will be could be solved by following a process of precedence, similar to that followed in SA`s legal system. In terms of legal precedence, if one court rules on a legal principle then all other courts in that jurisdiction must follow that ruling. Only a higher court can overturn it.
She proposes that charters that have not yet been drafted should follow the principles of those that have been published in order to provide some degree of certainty to industries without charters. In this scenario, the Department of Trade and Industry could act as the `higher court` and reserve the right to overturn a principle or rule that a particular industry need not follow.
In conclusion, Hay urges those creating charters in whatever industry to be mindful of the potentially negative impact of acting in isolation from other industries, for the benefit of the economy as a whole.
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