ICT charter wait continues

Johannesburg, 19 Jan 2009

The draft ICT Sector Codes of Good Practice on Broad-Based Black Economic Empowerment will not be gazetted yet and has been referred back to the industry to resolve several issues.

Convenor of the ICT empowerment charter steering committee Norman Munzhelele explains what the delay is this time around: “A draft was submitted last year for the DTI [Department of Trade and Industry] to analyse and assess. The DTI had questions in some areas on that draft and the proposed codes were sent back to the steering committee. We have since reconvened and concluded the sector codes in alignment with policy. We are hoping that it will be ready at the end of the month for resubmission.”

Munzhelele says members of the steering committee have gone back to consult with their respective industries and are scheduled to meet in February, adding that “he is confident it [the sector codes] will go through this time”.

The final draft charter will be submitted to government for consideration and publication as a sector Code of Good Practice, in terms of section nine of the Broad-Based Black Economic Empowerment Act 53 of 2003. The minister will then publish the draft charter in the Government Gazette and allow the public a period of at least 60 days to comment.

Problem areas

“One of the main areas that the DTI had questions on was the issue of ownership,” explains Munzhelele.

The DTI's Broad-Based Black Economic Empowerment Codes of Good Practice and the previous draft of the ICT charter both stated that 30% of a company's ownership had to be in black hands. In the most recent draft submitted to the DTI, the steering committee recommended that there should also be a R7.5 billion cap on ownership - meaning that any deal which has a value of at least R7.5 billion will be taken to be in compliance with the codes.

The DTI returned the draft requesting an economic rationale for this.

Munzhelele says the rationale had to do with setting a realistic standard for black companies and investors, saying: “If you consider a company with a market value of R100 billion, it would mean you would have to raise R30 billion to get a 30% share in the company. This is not realistic sum for black people to raise.”

Munzhelele also says the committee has redrawn its sustainable programmes in social investment - another area which the DTI said needed to be ironed out.

Lengthy process

It had been hoped that the ICT BEE charter would be in operation by 2005, but the charter process suffered a series of setbacks.

In May 2005, the ICT steering committee handed over the final draft of its ICT BEE charter to the Department of Communications. It took the industry over two years to reach consensus on the charter.

At the same time, the DTI was finalising its Codes of Good Practice, and stated that once the Codes of Good Practice were finalised, key amendments were to be made to the draft ICT BEE charter so as “to ensure alignment and harmonisation”.

The adoption of the ICT BEE charter stalled as the steering committee waited for the complete DTI Codes of Good Practice to finalise the ICT charter.

In 2007, the ICT BEE charter was finalised again and submitted to the Department of Communications and subsequently sent to the DTI for consideration. It was referred back. In February 2008, trade and industry minister Mandisi Mpahlwa said the ICT charter had not been received by the DTI by the 9 February deadline and a new deadline was set for August.