Sector ratifies third draft

Johannesburg, 17 May 2004

For the most part, the third draft of the ICT empowerment charter was endorsed by the delegates at the ICT black economic empowerment indaba held in Johannesburg on Friday, says Dali Mpofu, chairman of the charter working group.

Mpofu says tension had mounted during last week and the possibility was raised that there would be serious opposition to the draft at the indaba. However, in all the discussions there was a general endorsement and no substantial deviations were suggested, he says.

"The SA Communications Forum did put forward a proposal saying they felt the targets for black equity ownership were quite low and proposed equity ownership of 40% by 2009, instead of the proposed 25% to 30% stated in the third draft. The working group will be considering the proposal," he says.

However, not all have supported the view that equity targets are too low. Soria Hay, executive director of integrated equity and debt company Bravura, says the targets are "onerous to say the least", and significantly higher than the targets set for the financial services industry.

Hay says the ICT charter`s management targets may stifle entrepreneurship, particularly white entrepreneurship, as the targets apply to all sizes of companies. "If three to four out of five employees of a small company have to be black, that hardly leaves room for family businesses, for example, which are an important component of our economy."

On the issue of multinational equity ownership, Mpofu presented a letter from the US Chamber of Commerce at the indaba. The chamber has offered to mediate between the multinationals and the working group. He adds that there appeared to be no opposition to the issue of equity ownership by the multinationals at the indaba.

Initial targets

Mpofu`s view is echoed by Martin Vergunst, MD of the Computer Sciences Corporation SA (CSC), who says multinationals appear to be taking a more pragmatic view on the issue of equity ownership and there was no real opposition expressed at the indaba on the issue of multinationals giving up equity ownership.

"However, while CSC accepts the 2009 targets for equity ownership, there is still the issue of initial targets and what we will have to achieve to become classified as empowered," he says.

Mpofu says the initial targets will not be placed in the charter. This responsibility will be handed over to the ICT Council, which will be formed once the charter comes into being. "The ICT Council will most likely set initial targets based on consensus within the market."

Equity still an issue

Luanne Grant, executive director at the US Chamber of Commerce, says the chamber will meet with the multinationals this week to discuss the equity issue ahead of a meeting with the working group, which is scheduled for after the 24 May deadline for submissions to the charter process.

She says the multinationals that made the initial submission to the working group with an alternative proposal on the issue of equity ownership, including Microsoft, HP, Oracle, IBM, EDS, Intel, Cisco, Veritas and Dell, approached the chamber to mediate between themselves and the working group.

"For some companies, the issue of equity can be managed, although it will take a lot of negotiating with the corporates` head offices. However, for some companies, equity ownership is just not possible because of the way those companies are structured and operate.

"So we hope to negotiate to bring about a balanced scorecard to allow those multinationals to do more in the other areas of the scorecard, which is true broad-based empowerment," she says.