ICT Charter back in play

Johannesburg, 07 Mar 2007

The long-awaited ICT Charter could be gazetted as a code of good practice before the end of the month, according to a member of the industry steering committee.

However, the final code will bear little relation to industry's final draft, due to extensive changes in the Department of Trade and Industry's (DTI) black economic empowerment (BEE) Codes of Good Practice.

So says Andile Tlhoaele, MD of Inforcomm and long-standing member of the ICT Charter steering committee.

Delays

Industry players began consulting on the development of the ICT Charter in 2003, resulting in four drafts and three "final" versions. The last of these was released in May 2005. The approval process then stalled as the DTI sought to update its own codes which would override the minimum requirements of all other sector codes.

"We had to wait for the DTI's codes to be ratified before we could progress with getting the ICT sector's charter gazetted as a Chapter 9 or Code. Our other option was a Chapter 12 approval. However, this wouldn't have compelled the Independent Communications Authority of SA, government or its agencies to ensure partners and suppliers from the ICT industry complied with its parameters," says Tlhoaele.

Less for more

Now that the DTI's codes have been gazetted, Tlhoaele says the approval process should be considerably quicker, especially as the steering committee has realigned the 2005 Charter to the DTI's codes.

"We have revisited the codes and predominantly realigned the seven pillars of the ICT Charter to the DTI's codes. The only pillar which has gone unchanged is that of preferential procurement," he explains.

The steering committee has also addressed the needs of small and medium businesses (SMBs) in the revised ICT Charter.

The DTI's codes provide exemptions to companies in their first year of business. In addition, Tlhoaele says that companies with turnover up to R5 million per annum will immediately be deemed to be compliant, while companies with turnover of up to R35 million a year can choose any four of the seven indicators to comply to.

"We really have endeavoured to capture the principles of broad-based BEE. This means helping government, the economy, society and businesses to grow. We believe that the measures introduced for SMBs will help these companies to develop over time," he explains.

Multinational pressures

International ICT companies with a presence in the country have been given less flexibility. Tlhoaele says the revised Charter does not include a blanket exemption on ownership for multinationals and compliance will take more than "over-performing" on the remaining indicators.

"Multinational ICT companies will have to motivate for individual exclusion or Statement 103 in terms of the ownership portion of the codes. Companies that are successful in this motivation will not have the option to over-perform on the remaining pillars, instead they will be assigned a substitute requirement," he says.

As it stands currently, Statement 103 of the Charter says that ICT companies who believe that they could suffer "inherent commercial harm due to, amongst others, legal, technological or policy barriers" through the sale of equity may apply for a certificate of approval.

Should a certificate of approval be granted, the organisation will be required to replace that pillar with one of four approved substitutions, namely: establishing partnerships with BEE entities or SMMEs on matters relating to research and development, including intellectual property in the ICT sector; the expansion of manufacturing or assembling plants in SA; the location of substantial new investments in SA; or the placing of substantial new investments in global markets.

This equity equivalent contribution, says the statement, will be measured against the value of their operations in SA.