Tuesday, April 6, 2010

SOS News ICT Charter lodged with DTI, B-B BEE policy, legislation etc.

Hello all

A further quick update on the issue of the ICT Charter and the issues of broad-based black economic empowerment in the ICT sector.

I have just checked the DTI's website and as reported by Business Day the ICT Charter has been lodged with them. I had a quick chat to some of you and most of you were surprised that it had been lodged. The ICT Charter process collapsed a number of years ago.

I will check with both DTI and with DOC and see if I can get a copy of the latest Charter. Further, if anyone knows anything about this document do contact me so that I can send the information out.

As stated in a previous email the DOC has stated that the new ICASA ownership and control regulations, the ICT Charter and the amendments to the Electronic Communications Act will work together to ensure improved BEE in the sector.

Just a quick history of the Charter process. In the middle 1990s government encouraged industries to come together to look at BEE ownership issues. Several charters were concluded (e.g. the banking sector charter) but although Charters were an important starting point there were a number of problems - one of the key being that the Charter process benefited people with access to capital but transformation didn't penetrate much deeper than this. For instance there was very little transformation at the management level of companies. In the late 1990s government decided to introduce new policy calling for broad-based black economic transformation. A document called "A Strategy for Broad-Based Black Economic Empowerment" was released in 2003. It defined broad-based empowerment. Further, a generic score card was developed including 7 important elements. Each element was given a score out of a maximum of hundred points. The 7 elements included ownership (20 points), management control (10 points), employment equity (15 points), skills development (15) points, preferential procurement (20 points), enterprise development (15 points) and socio-economic development (5 points). Companies were given an overall score in terms of these various elements.

The Strategy was followed by the B-B BEE Act passed in 2003 and promulgated in Jan 2004. The Act outlines all the issues surrrounding the development of codes of good practice and outlines govt's leverage for the implementation of B-B BEE. Government depts and public entities must now take companies' BEE credentials into account when:

  • determining qualification criteria for the granting of licenses and concessions.
  • developing and implementing a preferential procurement policy
  • determining qualifications for the sale of state-owned enterprises
  • developing criteria for entering into parternships with the private sector
The new ICT Charter will therefore need to:
  • Take carefully into consideration the issue of B-B BEE. The Charter will need to comply with this.
  • Further the Charter will need significant input from industry players. Generally Charters are developed and agreed upon by industry players before they are submitted to the DTI.
I will certainly check with the DOC to find out what is happening with this process.

If you want to access the latest documentation on B-B BEE please check the DTI's website. Please Click here for the BBBEE Act.

Warm regards