Let it die

After an eight-year wait, the ICT charter is set to do more harm than good by muddying the empowerment waters.

After eight long years of toing and froing, the ICT sector will finally have clarity on how it should implement empowerment, as the long-awaited charter has been submitted for gazetting. However, this is not exactly good news.

In fact, it leaves companies wondering what exactly they are supposed to do to measure up.

Nicola Mawson, senior journalist, ITWeb

The charter process has been marred by delay after delay, as several versions were finalised, and then reworked; an absolute irony considering how fast-changing the sector is. Meanwhile, ICT companies have gone ahead and implemented empowerment deals as best as possible, because there wasn't much in the way of guidance.

For years, the sector had only the Department of Trade and Industry's BEE Codes of Good Practice to rely on to spell out how companies should put empowerment plans in place.

The codes, which came into effect in 2007, provide generic guidelines and indicate how companies can get points to move up the empowerment ladder.

Any deals that companies in the sector have done could only be measured against these codes. In fact, any empowerment - from staffing to procurement - was ruled by the codes.

However, once the charter is finally gazetted, the sector will be measured against the charter, and not the codes.

Admittedly, we won't know for sure what the exact requirements are - first the draft needs to be published, and then there's 60 days for public comment, before it finally comes into effect.

However, it will provide a measure of clarity, and that's a good thing. Or not.

Clear as mud

What the charter actually does, in its current form, is muddy the water even further. Now, instead of having to sell 25% plus one vote to an empowerment partner, companies need to sell 30%.

In addition, it isn't clear which companies this will apply to. There are conflicting reports: it applies to all ICT companies, says one official; and another says listed ICT companies only need 25% plus one vote, and are exempt from the higher requirement.

That doesn't help at all.

In fact, it leaves companies wondering what exactly they are supposed to do to measure up.

Then there's the small problem of the fact that the bar for ICT companies is higher than the rest of the economy. This leaves conglomerates in a bit of a pickle. How do they empower their ICT entities to 30%, but leave the rest of the group at 25% plus one?

On top of which, the charter adds requirements to stipulations. If an ICT company wants to sell cellphones to a mine, for argument's sake, it will have to comply with the mining charter so the mine can gain procurement points. Ditto construction, financial services, tourism... the list goes on.

This is simply impossible to manage, because all the charters have different requirements. That's even before companies can contemplate providing a service or product to state-owned entities like Eskom, which also have their own set of rules.

Bureaucratic bungle

Legislation in the sector was meant to make things easier - not make it so hard for companies that transformation becomes a spiral of red tape, instead of a way to empower those who deserve to benefit.

The charter will create a regulatory nightmare in its current form - and do nothing to redress the imbalances of the past. After almost eight years in the making, it's frankly defunct now anyway - the sector has moved on and done its own thing in accordance with the codes.

Should the latest iteration of the charter go through, the ICT industry will have to go back to the drawing board to re-empower.

This is why it's so important that companies in the sector sit up and pay attention now. As soon as the charter is gazetted for comment, the sector must make its voice heard.

Failing to do so will inevitably leave the industry in a mess that will have essentially been of its own making.

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