A long road for South Africa"s BEE ICT Charter process

Von Samantha Perry

South Africa"s ICT BEE Charter process, now (hopefully) on the final stretch towards implementation, was launched in June 2003. At the time of the launch the Charter Working Group said it hoped to have the process finalized and the charter gazetted by March 2004.

Eighteen months since the launch, the charter is now in its final draft version, after four successive drafts were released, each incorporating the overwhelming number of public submissions made after each draft release. The final draft was released on November 9, and the charter has now moved into the next phase of its life. This phase - known as the interim, or pre-adoption phase - will see any outstanding issues being resolved in anticipation of the 1 March deadline, and the charter itself being finalized. Despite the draft being called the ?final draft", Working Group chairman, Dali Mpofu, was quick to comment, at the time of its release, that the document is by no means the charter itself.

The process to date has involved two National Indabas (held on 16 and 17 September 2003 and on 14 May 2004 respectively), a stakeholders" mini-summit (16 February 2004), a series of roadshows (following the release of the first draft in March), a workshop held at Nedlac (in September this year), and consultations with Icasa and the DoC, which commenced in August.

The drafts were released on 9 March, 8 April, 10 May, 23 August and 9 November respectively. The lengthy period between the release of the fourth and final versions occurred due to the overwhelming number of submissions on the fourth version.

The issue of equity for multi-nationals was resolved, to a degree, shortly before the release of the fourth draft. A public announcement made by the DoC and the Charter Working Group on 16 August, revealed that provision had been made for companies to apply for a non-conformance certificate. This, while not a mechanism for blanket exemption, will allow companies that feel that compliance with the equity ownership requirements will ?cause inherent commercial harm", can qualify for a non-conformance certificate, whether or not these are multi-nationals.

The final draft featured significant score card adjustments. For example, the long-term (2015) and mid-term (2010) BEE direct shareholding targets are now both 30 percent, the previous long-term target of 35 percent having been reduced, due to the fact that, in terms of the Companies Act, 35 percent is the threshold for making an offer to minorities.

The issue of whether direct ownership by, and involvement of, disabled persons at a management and control level should be compulsory, or counted as bonus points has been resolved, and ownership by disabled persons will now count towards bonus points to a maximum of 10 percent of the total score. Companies can also earn bonus points towards the enterprise development weighting by establishing and/or supporting enterprises in which disabled persons are involved.

Going forward, government"s concerns will be tabled and addressed, while outstanding issues will be addressed. These include: clarification and expansion on the agreement reached with the multi-nationals around equity sales; governance issues around the formation, running, funding and rules governing the BEE Council; the issue of aligning the charter with regulations affecting industry players, for example, the BEE requirements imposed by Icasa in its licensing regimes need to be aligned with the charter and vice versa.