The black economic empowerment (BEE) charter on information communications technology (ICT) is not merely being implemented to create a black middle class but to ensure that South Africa becomes an information society through the bridging of the digital divide while increasing the number of participants in the economy, Advocate Dali Mpofu said on Tuesday.
Mpofu is the chairperson of the ICT charter working group and a director at Allied Electronics and Allied Technologies. He was named IT personality of the year in 2004, and is also the president of the Electronic Industry Association. The charter, released in draft form on Tuesday, is a “work in progress”, according to Mpofu, that aims to transform the technology industry on a voluntary basis. “Each sector will recognise what is important to it … and in this sector the issue of skills development is seen as crucial. Preferential procurement is also crucial,” Mpofu said at the unveiling of the ICT charter’s first working draft. The unveiling was attended by South African Broadcasting Corporation board chairperson Eddie Funde, Business Unity South Africa president Patrice Motsepe, representatives of the departments of trade and industry and communications and a plethora of ICT, electronics and broadcasting participants and stakeholders.
The core transformation indicators in the charter include ownership, management and control. The charter aims to regulate key employment equity such as skills development, employment equity, enterprise development, and preferential procurement as social investment. “Ownership is important, but because of problems in the past when people equated BEE with equity ownership, people will now tend to de-emphasise the ownership issue,” Mpofu said, adding that because of the apartheid legacy, transformation should nevertheless embrace ownership.
The ICT sector contributes about 11% of the gross domestic product, Mpofu said, noting that it is among the top five contributors to South Africa’s economy. Apart from ownership, corporate social investment programmes should also focus on skills development. In this way, because most sectors rely heavily on the ICT sector, the South African economy will be bolstered. The government has identified the financial services and ICT sectors as key economic drivers. The effectiveness of the ICT sector simply means a better economy for the country, Mpofu argued. He slated claims or “slogans that fly around about the enrichment of the black middle class”.
The affirmative procurement from suppliers, for instance, he maintained, is a reference of millions of people in the workforce and this includes the lowest in the economy. “After 10 years of democracy, the notion of just giving shares as a form of BEE has totally been dispelled,” he said. Procurement is not the only aspect of the ICT sector the charter examines, but it is the area that Mpofu said will have the most benefits for transformation. “If we get this right, the strategy will succeed. In the financial services sector 40% of procurement is ICT,” he said. This will ensure that the empowerment strategy cascades through the South African economy as previously disadvantaged companies will have the opportunity to take part in commercial deals.
All companies, regardless of size, need information technologies, Mpofu said. Mpofu was quoted in a press release as saying: “Clearly, the prime objectives include the enabling of meaningful participation by black people in the ICT sector, achieving a substantial change in the racial composition of ownership, management and control, as well as in the skilled and specialist positions inside companies. “However, this charter is not just about rules and regulations. There are clear issues that must be addressed, such as developing the right skills, managerial as well as technical; bridging the digital divide to bring those skills to all aspects of our lives in South Africa and emphasising the need to grow this key sector of our economy.”
The charter does not come without challenges; obstacles that need to be overcome include companies that fake empowerment by using a front person. Access to funding, shareholder agreements that limit black presence on company boards and foreign-based companies are other challenges listed in the draft, which also highlights the need for the charter. “Ten years after the demise of the apartheid system, various efforts at advancing BEE have been fraught with unfortunate business practices such as fronting and unsustainable ownership models. The effects of current BEE programmes on the South African social and economic fabric have been relatively stunted by ad-hoc and inconsistent application resulting from non-uniform rules even by different government departments and state-owned enterprises. This situation begged for a serious effort to bring about harmony and uniformity.”
This situation resulted in the broad-based BEE Act of 2003, on which the working charter is closely modelled. The final charter, expected to be complete by June 25 this year, will comprise feedback from stakeholders and roadshows as well as research conducted by the research team. The recommendations will be published on the internet on a monthly basis, allowing those with access to make further comments. After the charter has been gazetted, there will be continual changes to allow the charter to keep pace with the fast-moving technology sector, Mpofu said.