The ICT charter needs to be reworked, yet again, as the new empowerment Codes of Good Practice come into effect this month.
The charter, almost a decade in the making, will need to be changed to address issues such as ownership, procurement spend and enterprise development.
Trade and industry minister Rob Davies last week released the revised Codes of Good Practice for broad-based black economic empowerment (BBBEE). Davies said the codes "symbolise a new beginning in the re-orientation of the transformation policy to focus more on productive BBBEE and growing effective black-owned enterprises".
Key areas of the amended codes include the consolidation of the generic scorecard into five elements from seven, which Davies says has been aligned to government's key priority programmes.
Among the changes are that points for ownership have been broadened to include designated groups in the main points. The thresholds for exempted micro enterprises (EMEs) and qualifying small enterprises (QSEs) have been increased and priority elements have been introduced.
These elements are ownership, skills development and supplier development. A minimum of 40% compliance must be achieved in these categories, otherwise companies will be downgraded a level.
EMEs and QSEs that are at least 51% black-owned are automatically qualified as level two contributors, while 100% ownership translates into the highest category, level one. There is a 12-month transitional period.
Alignment needed
Davies notes that sector codes remain in effect until amended. Transcend Corporate Advisors director Trevor Tshabangu says all charters must be amended to fit in with the new codes. He notes there is quite a bit of work ahead for the ICT sector.
Tshabangu explains that all charters need to be aligned with the general principles of the new codes. He expects the new thresholds in the codes to lead to empowerment levels dropping "significantly".
This is because it will be difficult to retain ratings under the revised goals, says Tshabangu. He adds that a change that needs to be taken into account is that there is now a "new" element called enterprise and supply development, which merges enterprise development and procurement.
Tshabangu adds the increase in the threshold for EMEs to R10 million, and QSEs to R50 million, is a major change. He says this makes it likely small companies will score more points under the new codes.
In addition, because the percentage to qualify as black-owned has moved to 51%, empowerment deals will have to be reworked, and the ICT charter aligned with this measure.
Under the codes, companies will only get points for enterprise development if the entities they support are black-owned, he adds.
Tshabangu adds, however, there are some areas in which the charter has higher targets than the codes. He says clarification, as to whether these aspects in the charter must be aligned, is needed.
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