Yes and no to equity

Johannesburg, 09 Jun 2004

[VIDEO]While the multinationals have agreed to be bound by all the requirements of the ICT empowerment charter and the balanced scorecard, this does not mean they can simply give up equity.

At an official media briefing by the ICT working group and the American Chamber of Commerce yesterday, it was announced that the multinationals had agreed to comply with the charter, its balanced scorecard and government`s 2003 Black Economic Empowerment (BEE) Act after a meeting held between the working group and the multinationals over the weekend.

However, Dali Mpofu, empowerment charter working group chairman, says it was also acknowledged that some multinationals had specific circumstances that made it difficult for them to sell equity in the normal course of events to attain the 25% black ownership by 2009, as required by the scorecard. Reasons for this include global policies, intellectual property rights and company structure.

"It was therefore decided at the meeting to set up a committee which will evaluate the challenges facing multinationals on a case-by-case basis as we recognise that this is not a case of one size fits all. The committee will take submissions from companies until the end of June, which will then be discussed to try and find solutions in each case," he says.

As soon as possible after that, a fourth draft will be released, followed by the final draft. The final draft was initially due to have been released on 25 June, Mpofu says.

No BEE is the economic equivalent of a death sentence.
Death sentence

While the multinationals had agreed to look at the sale of equity, it was not a 'black and white` issue, says American Chamber of Commerce executive director Luanne Grant. "The agreement does not state that there is absolutely going to be sale of equity, but that we will be looking at a number of equity solutions."

However, while SA wants direct foreign investment, it needs to be done alongside the process of transformation, says Mpofu.

"There has been a willingness by all parties involved to comply with the charter. This translates into the sale of equity. While empowerment legislation is not compulsory, if a company decides it is rubbish and does not do empowerment, they will hopefully lose market share and die. No BEE is the economic equivalent of a death sentence," he says.