Long-awaited ICT charter back on track

By   |  August 24, 2004

The South African IT community released its long-held breath on 12 August as the South African ICT Charter Working Group and the American Chamber of Commerce (Amcham) announced that it had reached agreement regarding equity requirements for multinationals in the delayed ICT BEE charter.

The process of creating a charter for black economic empowerment in the ICT sector was temporarily derailed after multinational companies with subsidiaries in South Africa objected strongly to the equity equivalent portion of the charter. According to the fourth draft, released in May, no exceptions would be made for divesting equity, and no equity equivalents were to be considered.

On the one side of the fence, local companies and their representatives demanded level playing fields for local and international companies. On the other side, multinationals feared that the home office wouldn’t go for selling equity in subsidiaries, and that they would not get a fair price for their companies.

The dispute over the fourth draft saw Amcham and the ICT Charter Working Group enter lengthy negotiations, which – according to Dali Mpofu, head of the working group – were “quite robust and at times frustrating”.

The bilateral talks have finally come up with a solution which both parties expect to be amicable to all concerned. While there will be no blanket exemptions, multinationals will be able to apply for exemption to equity in specific cases, obtaining a certificate of non-compliance from the BEE ICT Council, which is still to be formed.

“The spirit of the agreement demonstrates the importance of partnerships,” says Mpofu. “The critical issue of equity is that the principle of no blanket agreements will be adhered to.”

Mpofu says that in cases where the potential for injurious financial harm can be demonstrated by the company due to the effect of equity divesting can be proven, the company will be able to apply for exemption.

“It reflects the maturity that exists in this sector to be able to find a resolution to any matter, and take the industry forward,” says Dali.

The milestone agreement also marked the first official involvement of government, as the working group plans to hand over the charter to government in the next draft, expected by the end of the month. By involving government at this stage, we can expect to see its influence on the charter by the fifth – and hopefully final – draft.

Minister of communications Dr Ivy Matsepe-Cassaburi noted that the charter’s main goal was to ensure that a large number of people benefit, and to make sure that “the impact of the charter is not only felt by a few”. While the equity issue has gained most press, the broader implications should not be forgotten.

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