At least two organisations - representing 3 000 ICT professionals and 130 companies - are vehemently opposed to the final implementation of the long-awaited ICT charter, arguing it should be scrapped as it will not aid empowerment in SA.
However, the Black IT Forum (BITF), which represents about 2 200 professionals and 1 500 students, argues that the charter is a vital empowerment tool and needs to come into effect to transform the sector.
The opposition to the charter will leave the Department of Trade and Industry (DTI) in a difficult position, as the sector has to be in agreement before a final version can be published. It is not clear how these issues will be resolved, or what the way forward will be.
The DTI finally gazetted a draft charter, which has been more than eight years in the making, in June. Members of the public had until 10 August to comment.
The charter requires that unlisted companies in the ICT sector be 30% empowered, and listed entities sell 25.1%, with equity deals capped at R7.5 billion. The generic codes only require firms to sell a 25.1% stake.
The 30% provision has previously been slammed as being too onerous to implement as firms have followed the department's 2007 BEE Code of Good Practice.
DTI's director of media and public relations Sidwell Medupe says it received 19 submissions on the contents of the draft document, mostly from ICT companies and organised bodies in the ICT sector.
“The nature and content of the submissions vary; there are those that commented on the set targets and allocation of points, there are those that commented on process issues, and those that seek clarity on certain aspects of the charter,” says Medupe.
No consensus
The industry is divided over whether the sector should have a charter at all. Some argue the stipulations are too onerous, and another body says the charter is a vital transformation tool.
Medupe says the department is analysing the inputs and will then inform trade and industry minister Rob Davies of the outcomes. “Once the minister has been briefed and satisfied that all public comments were dealt with sufficiently, and that the process was transparent and inclusive, he will then gazette the final sector code in due course,” he explains.
Computer Society SA (CSSA) president Adrian Schofield says the sector is divided over the charter as some bodies want it scrapped, while others are in favour of the document in its current form.
Schofield does not know how the department will resolve the impasse. The DTI is “between a rock and a hard place” as the final charter cannot come into effect unless the sector is on the same page.
Companies are endeavouring to comply with the generic codes and many have already empowered in accordance with the codes, notes Schofield. He says the current charter may require some companies to re-empower. “Do they have to start again?”
Work on the charter started in 2003, which was followed by the launch, two years later, of the first “final” version. Then the DTI gazetted the generic codes in February 2007, which meant the document had to be aligned with the codes, causing yet another delay.
Once the charter becomes a sector code, it will supersede the DTI's generic codes and be the “primary reference for transformation in the sector,” says the DTI. It will be in effect until 2026, with a “mid-term” review in 2016.
Schofield says the CSSA, which represents about 3 000 professionals in the sector, does not want the charter at all. He says it will be a waste of time and the codes should rather be kept in place.
The CSSA argues that the administrative costs of implementing the charter will outweigh any transformational advantages.
Can't be done
Information Technology Association (ITA) spokesman Adam Rabie says some targets are unrealistic and will be anti-transformative. He explains capping deals at R7.5 billion will result in the empowerment stake being diluted as firms will continue to grow.
Rabie says, for example, a large company worth R100 billion would be 7.5% empowered because of the cap. The “lost” empowerment opportunity would be to R22.5 billion in such an instance, he explains.
The ITA represents about 150 companies in the sector, which range from large multinationals to small and medium enterprises. It is the largest IT association in the sector, but argues it was left out of the consultative process.
Rabie queries the different standards for listed and unlisted entities. The charter also does not address job creation, despite this being a significant national requirement.
The ITA would prefer if the sector continued following the codes and the charter was abolished altogether, Rabie points out. He says unrealistic targets will harm companies because they will have to find a way to fund a larger stake, which could impact profits, negatively affecting their economic viability and the empowerment partner.
Rabie says the sector has done a lot of work to meet the expectations in the codes, which were gazetted in 2007. “People have been following the codes for the last few years.”
Skirting empowerment
However, BITF secretary Motse Mfuleni says those against the charter are just trying to protect their bottom line and do not want “painful targets”.
Mfuleni warns the sector must empower, or be forced to do so by external elements in a similar way that ANC Youth League president Julius Malema is calling for mines to be nationalised to speed up transformation.
“Companies have an unjustifiable reluctance to become inclusive... Those who are outside... will be standing there throwing stones,” says Mfuleni.
The BITF is in favour of the charter because “there's no other way”, comments Mfuleni. “We are split; we are more split than before. That's what worries me.”
Mfuleni says while Davies “supposedly” cannot gazette the current draft if the sector is split, there is political pressure to bring the document into effect. “The minister is in trouble.”
Steering committee deputy chairman Andile Tlhoa'ele is waiting for feedback from the DTI. He says the draft charter is about 95% of its final version and it would be “historic” if it received opposition from the sector.
Tlhoa'ele argues the codes are in the process of being revamped and targets will be increased, which will bring them more in line with the charter.
ICT is a strategic sector, because it cuts across the rest of SA's economy and must empower to greater level than the rest of the economy to ensure skills development, comments Tlhoa'ele. “Otherwise we will be killing our own sector.”
Tlhoa'ele says the steering committee represents the entire sector and no-one objected to the document being gazetted. However, bodies have previously indicated they have been left out of the process.
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