ICT BEE charter 'in disarray`

By Itumeleng Mogaki, ITWeb junior journalist

Johannesburg, 23 Nov 2005

Industry associations fear some businesses may consider "charter-hopping" between industry sectors to find the most beneficial empowerment charter, and feel the ICT black economic empowerment (BEE) charter is in disarray.

At a meeting held in Randburg yesterday, organised by industry associations including the Electronics Industry Federation (EIF), the Communications Cabling Association of Southern Africa (CCASA) and the Black IT Forum, industry players voiced their concerns about the Department of Trade and Industry`s (DTI`s) Code of Good Practice and the ICT empowerment charter process.

The purpose of the meeting was to get clear answers from Jeffery Ndumo, head of the DTI`s BEE unit, regarding the DTI`s Code of Good Practice.

However, Andile Tlhoaele, president of the CCASA and member of the ICT empowerment charter steering committee, said Ndumo had cancelled at the last minute.

Roger Dawes, EIF executive director and chairman of the meeting, said: "It`s been three years and we still don`t have a charter. The industry would like to know what is happening."

"While we understand the process and how it will end, we would like to know what we should do in the meanwhile," noted Tlhoaele.

"I know of around 30 000 companies that have complied with the charter, but it looks like the document will be obsolete by 2008."

Issues raised included the exemption of small and medium enterprises (SMEs), equity targets, multinationals, rating agencies and 'charter-hopping`.

Shopping around

Dawes elaborated on the fear of 'charter-hopping`, saying a business with various sector divisions could opt to adhere to a different charter with lower equity targets.

He said the industry earlier requested that the ICT empowerment charter be brought in line with the DTI`s code. A key difference between the two is that the ICT sector charter has set a 30% equity target and the DTI code has a 25% target.

"We need clarity on what equity target to follow. This problem will be resolved when we are able to apply the balanced scorecard - as evaluated by approved BEE rating agencies - and become, for example, a satisfactory BEE company by achieving a score of 40%.

"However, today there are no approved rating agencies, the process of gazetting individual charters is not clear, and the code for the other essential elements of the charter are not there."

Seeking answers

Asked who is chairing the steering committee, Tlhoaele said: "No one is at present, following the resignation of Joe Mjwara from the Department of Communications, but we have agreed that the department should lead the committee."

Tlhoaele said the process is there but no one knows what should happen while they wait for Department of Communications` plans to gazette the charters.

"The current DTI code provides management and equity targets but we still need answers about the rest of the code," he noted.

Based on the time it took the DTI to release the first phase of its code, the second phase could well take over three years before completion, said Dawes. "That is unacceptable."

Dawes pointed out that there has been a focus on equity and management targets, rather than on skills development. "We must not forget that the ICT sector has the challenge of skills shortage, and this needs to be addressed urgently by the code to ensure sustainability."

Tlhoaele commented that government expects a 6% growth rate for SMEs although clarity is still needed as to whether SMEs are exempt from equity targets.

"We understand that DTI`s second-phase code will address the issue of SMEs` exemption and multinationals."

The meeting ended with a resolution to forward all of the questions and concerns raised to the DTI before the end of this month.