ICT charter stalls again

By Damaria Senne, ITWeb senior journalist

Johannesburg, 23 Nov 2007

The ICT industry`s black economic empowerment (BEE) charter has stalled again, although it is unclear what has caused the latest delay.

Seven months after government said the ICT charter has been aligned with the Department of Trade and Industry`s (DTI`s) BEE Codes of Good Practice, the document has yet to be gazetted so that government has a legal stand in case of a dispute.

The Department of Communications (DOC) said it was unable to comment on the delay, as the chief director in charge of policy was out of the country.

However, Mthunzi Mdwaba, chairman of Business Unity SA`s (Busa`s) standing committee on transformation, says the DOC has approved the ICT charter.

It went through the executive committee of the DOC, and there was an agreement with the DTI on the process that has to be followed for it to be gazetted, Mdwaba notes. "As to when this will happen, I don`t know."

The DTI had not responded to ITWeb`s requests for an update by the time of publication.

However, a source, speaking on condition of anonymity, points out that the person who used to drive the ICT charter process at the DTI resigned some time ago, and new people still have to be brought up to speed with the charter`s processes.

DTI under pressure

Mdwaba says the DTI is under pressure to deal with a number of transformation issues that have relevance to the ICT charter and its implementation. These include setting the criteria for the approval of BEE verification agencies, he adds.

<B>ICT charter timeline</B>

June 2003 - The process of launching the ICT charter begins.
May 2005 - Final draft of ICT charter released.
November 2005 - Phase one of the DTI`s code released. This phase deals with the conceptual framework, the verification agencies, sector transformation charters, ownership and the recognition of the sale of assets and management.
December 2005 - Phase two of the DTI`s BEE Code of Good Practice released. This phase deals with the scorecard.
May 2006 - Cabinet approves ICT charter as a sector Code of Good Practice.
December 2006 - Cabinet approves the gazetting of phases one and two of BEE Code of Good Practice.
February 2007 - BEE Code of Good Practice is gazetted.

The lack of official approval of verification agencies is an issue of concern for business, in light of the fact that these agencies gain access to confidential corporate information, he explains.

He says Busa is aware that one of the verification agencies has an investment arm, and giving it access to confidential corporate information could potentially compromise those corporates.

The DTI should also provide the industry with input on how to set up the equity equivalent committee without consulting with the ICT sector, he notes. The equity equivalent committee has the right to approve a company`s proposal to invest in a development project, rather than selling shareholding to a BEE partner, in line with BEE Codes of Good Practice.

"We know Telkom rejected HP`s equity equivalence skills plan, and the DTI, which approved the plan, never consulted with anyone."

Industry agreement

Inforcomm MD Andile Tlhoaele, who is also part of the ICT charter steering committee, says the fact that government has not yet gazetted the charter should not stop the ICT industry from implementing it.

ICT companies should be using the charter as a measurement of their own BEE implementation, he points out.

"For the record, some government agencies are already implementing it without it being a sector code yet."

Past promises

In April, the DOC said the ICT charter steering committee would hold its final meeting to discuss the adoption of the charter, which was to be presented to the communications minister before it is gazetted.

The meeting was to mark the final phase of a four-year, often-troubled process in the development of the ICT sector`s BEE framework, which is aligned with the DTI`s BEE Code of Good Practice.

"More than 95% of the alignment work has been done and it is now up to the steering committee to do a final approval before the current document is adopted as the sector charter," says DOC spokesman Albi Modise.