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Draft Black Economic Empowerment Charter for the Information and Communication Technology (ICT) Sector

Category: Policy/Strategy
Date: May 2005
Sub Category:Policy/Strategy (South Africa)
Location:Republic of South Africa
Subject Matter:Collaboration / Partnership | Economic Development | Employment and Training
URL: http://www.ictcharter.org.za/draft.htm
Summary Information:
The May 2005 Draft Black Economic Empowerment Charter for the Information and Communication Technology (ICT) Sector ('the Draft Charter') was developed by the ICT Charter Steering Committee, comprising of industry, government and community representatives.

The Draft Charter provides a basis for transforming the South African ICT sector to incorporate the principles of Black Economic Empowerment (BEE). BEE is one of the range of measures being used to counteract the economic effects of apartheid in South Africa.

Detailed Information:
Application

The finalised Charter is intended to apply to the entire ICT sector and is to operate until February 2015. However, the Charter will apply in a qualified manner with regards to certain types of institutions who are granted a 'Certificate of Approval.' This may include ICT enterprises that can prove they would 'suffer inherent commercial harm' from the sale of equity and not-for-profit community entities (Draft Charter, 2.9.1).

Adoption of the Charter under section 12 of the Broad Based Black Economic Empowerment Act 2003 would render the Charter a statement of intent, which does not create legally binding obligations.

Purpose

The aim of the Draft Charter is to commit to the objectives of BEE in the ICT sector, which include promoting economic and social transformation in the sector, bridging the 'digital divide' by promoting access to ICTs and supporting sector growth.

Provisions in the Draft Charter include strategies and targets which endeavour to further the aims of BEE in the areas of:
  • access to ICTs and corporate social investment;
  • enterprise development;
  • preferential procurement;
  • skills development;
  • employment equity;
  • management and control; and
  • equity ownership.

    Implementation and the Scorecard

    The finalised Charter will be monitored and implemented by an ICT Charter Council ('the Council'). The Council will, inter alia, compile reports on the progress of BEE in the ICT sector, consult with stakeholders and develop mechanisms for monitoring compliance. The Council will also prepare an annual report which will be submitted to the Department of Trade and Industry and the BEE Advisory Council.

    A scorecard will be used as a means of evaluating BEE progress in the ICT sector. Institutions will be given a rating each year in accordance with their scorecard. The scorecard includes indicator targets and scores under each BEE element. Targets include:
  • 0.5% of profit-before-tax will be dedicated to corporate social investment which enhances the lives of black people;
  • 5% of procurement spend will be made available for BEE-contributing black owned small, medium and micro enterprises (SMMEs);
  • 2% of payroll will be dedicated to skills development of black people including women, youth and people with disabilities;
  • full compliance with the Employment Equity Act;
  • 50% black people in senior management (including 16.67% black women);
  • 65% black people in other management positions (including 30% black women).

    In addition, bonus points are able to be accrued (Draft Charter, 11.6) through, for example, provision of ICTs in rural areas and inclusion of persons with disabilities and youth in management and control.

  • Outcomes:
    On 6 September 2006, the ICT Empowerment Charter Working Group published a media release which anticipated further delays in the legalisation of the Draft Charter. These delays were mainly attributed to alignment of the Draft Charter with the then yet to be completed Codes of Good Practice (see link below).

    On 30 March 2007, the Financial Mail reported Roger Dawes, the executive director of the Electronics Industries Federation, as stating that the delays have caused a great deal of frustration in the industry. Roger Dawes has been closely involved in the alignment of the Draft Charter with the Codes of Good Practice and did not believe many changes to be necessary.

    On 7 September 2007, Engineering News online reported that despite ‘surface transformation’ in the industry, SMMEs continue to struggle in a blue chip company dominated market.


    Related Entries

    Organisation
  • Department of Trade and Industry (South Africa)
  • Information and Communication Technology (ICT) Charter Steering Committee
  • Black Economic Empowerment Advisory Council
  • Legislation
  • Broad-Based Black Economic Empowerment Act, 2003 (South Africa)
  • Employment Equity Act 1998 (South Africa)
  • Policy/Strategy
  • Black Economic Empowerment
  • Broad-Based Black Economic Empowerment Codes of Good Practice
  • Apartheid

  • References

    Media Release
    ICT Empowerment Charter Working Group (6 September 2006) ICT BEE Charter Finalisation Soon?
    Newspaper Article
    Financial Mail (30 March 2007) Blues on the Charter Front
    Engineering News (7 September 2007) ICT Charter Begining to Bear Transformation Fruit, But...
    Resource
    ICT Steering Committee (May 2005) Draft Black Economic Empowerment Charter for the ICT Sector

    Glossary

    Policy/Strategy (South Africa)

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