Multinational won`t sell equity yet

Johannesburg, 07 Jun 2004

The ICT empowerment charter working group, the American Chamber of Commerce and the multinationals it represents are to set up a committee to identify problems and challenges facing international IT vendors.

Danny Naidoo, Microsoft director for the developer and platform group, says this decision was taken at a meeting held at the weekend, in which the chamber mediated between the working group and chamber members.

"The multinationals put forward a number of proposals on dealing with the equity issue. These were discussed by a core group of leaders from key multinationals and a few members of the working group on Saturday outside the context of the broader meeting," he says.

Naidoo says he cannot disclose the details of the proposals as they will be discussed in further detail with the working group tonight. However, he says the working group appeared to be happy with the proposals.

Naidoo says the most important element to come out of the meeting with the wider group of around 50 representatives from the sector was an understanding that multinationals are not against black economic empowerment (BEE).

Another source who attended the meeting but does not want to be named, echoed Naidoo`s comments, saying the sector now understands the dilemma facing the multinationals.

"The reason multinationals face a challenge when it comes to equity ownership is that they provide services outside the boarders of a country. For example, some multinationals have call centres in SA servicing Europe. The revenue is therefore derived from a number of different countries, which complicates the issue of selling equity in one country. The sector now understands that selling equity is not just a black and white issue," the source says.

Forcing the hand of multinationals on the equity issue could therefore lead to reduced services being provided to SA and fewer companies using SA as a base to launch services into Africa and the rest of the world, the source says.

However, while the meeting raised the possibility of exclusions for multinationals, which have strict corporate policies against selling equity, the source acknowledged that few of the companies have such policies in place.

Naidoo says previously Microsoft felt the door had been closed to it to discuss the equity issue with the sector. "We now feel that door has been opened and the new committee can work towards a solution on the issue of equity and having a balanced scorecard for the ICT charter."

Dali Mpofu, chairman of the charter working group, says he is not willing to comment on the issue ahead of a joint statement, which will be released later today.