Charter to be legal document

Johannesburg, 13 Jul 2004

While it was previously thought the ICT empowerment charter would be a guideline for the ICT industry, the Department of Trade and Industry (DTI) says it will in fact be a legal document.

Polo Radebe, DTI director, said at a black economic empowerment (BEE) small and medium enterprise conference hosted by CIDA and the DTI today that the various industry charters would be drafted into legislation once they had been completed.

"Once each sector has completed the formulation of its charter, it will then submit it to government. Government will check whether it complies with the BEE Act, whether there has been broad-based industry participation in the formulation of the charter, and ensure it confirms to the code of good practice, which is soon to be released. If this is the case, the charter will then be gazetted, following which it will be drafted in as a legal document," she said.

While the ICT charter will be legislation, Radebe said there will be no legal penalties for not complying with the process. "Companies will still have the choice in the matter, but it is hoped the legislation will make it a business imperative to comply."

Ajay Lalu, director of Ernst and Young`s empowerment division, said at the conference that companies would have three ways to comply with legislation once it is instituted.

"The DTI is in the process of drafting criteria for accrediting agencies. Companies will then have the option to approach one of the accredited agencies, the industry councils that are being set up to administer the specific charters or the DTI directly."

Lalu said there has been a focus on ownership and equity because it is the easiest way to measure BEE, but this focus needs to change. "In all the economies of the world, businesses are owned by a minority of the population and why should SA be any different? Companies need to get away from just focusing on ownership and equity, but look at the other areas in the scorecard where the majority of transformation will be taking place."

Lalu said with legislation setting a medium- to long-term plan for BEE, companies must take strategic decisions now to ensure their BEE policies are successful.

In order to do this, he said, companies must determine which charter they are governed by, set BEE targets, collect credible measurable evidence, complete the scorecard, keep targets if the company does not match up to those targets yet, get accredited and then communicate its scorecard with stakeholders.