THE ICT Charter has come under fire from SMEs recently, partly due to the delays, and partly due to the provisions of the charter being perceived as making it more difficult for SMEs to do business.

The latest charter draft, released on 7 April, makes provision for SME development in a number of ways, but is unfortunately scant on detail.

In terms of exemptions, which are cause for much discontent amongst SMEs and multinationals in particular, SMEs can apply for a ?certificate of noncompliance? from the Charter Council (as can state-owned enterprises (SOEs), community entities and companies that would suffer commercial harm from the sale of equity). From the wording of the draft, it would appear that SMEs, community groups and SOEs are not limited to applying for exemption in terms of the equity requirements.

The draft unfortunately does not specify the criteria for exemption for SMEs, it merely notes that the Council will publish criteria for exemption for SMEs ?from time to time?.

If a noncompliance certificate is granted, the company concerned is expected to substitute the exemption with equivalents in other areas, such as research and development.

SMEs have been granted exemption from directly executing corporate social investment projects, and will rather be required to contribute 0,75 percent of profit before tax to a fund that will assist rural SMEs and cooperatives.

The charter has also laid down very specific requirements for development of the SME sector, via initiatives such as incubation, the introduction and formal and informal entrepreneurial programs, and the provision of skills development, training and mentioning by corporates.

Signatories to the charter are required to make both monetary and non-monetary investments, equal to 5 percent of procurement spend, in black-owned, black-empowered and black-engendered SMEs that are ?excellent and good contributors to BEE?.

The sector is also required to source a minimum of 30 percent of supplies from black enterprises - including SMEs - as well as implement preferential procurement policies and preferential payment cycles for small businesses.

The challenge here is going to be for white-owned SMEs, which will find it difficult to comply with the employment equity, management and control provisions. Procurement, however, is one area where white-owned SMEs can contribute without financially comprising their businesses. Training and development is costly, but hiring and training interns, for example, is far less costly, and very necessary for skills development. Mentoring can also be provided to, for example, an SME in a similar line in a rural area, at little cost beyond time and effort.

Submissions from community groups, organized labor, the multinationals and the broadcasting, electronics, IT and telecommunications industry bodies will be made to the Charter Steering Committee this week, and the charter will then be sent to government for consideration and publication as a Code of Good Practice. The finalized charter will remain in effect until 2015.

The latest version can be downloaded from

http://www.ictcharter.org.za

Definitions:

Black enterprise: where 50,1 percent ownership rests with black persons;

Black-engendered enterprise: where black women own at least 25,1 percent;

Black-empowered enterprise: an entity at least 25,1 percent owned by black persons.