Black Economic Empowerment in the South African ICT Industry

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Black Economic Empowerment in the South African
ICT Industry
Martin Vergunst, Managing Director CSC Computer
Sciences (South Africa) (Pty) Ltd
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Principles
BEE in the ICT Industry

• This initiative is underpinned by four key
  principles
• BEE is broad based includes, equity, human
  resources development, enterprise development,
  procurement and social investment
• BEE is inclusive all sectors of economy
• BEE is associated with good governance
  concerted efforts to ensure highest standards of
  corporate governance
• BEE is part of a growth strategy grow the
  economy not just distribute wealth

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Objectives
BEE in the ICT Industry

• Enable meaningful participation of blacks in the
  growth of the ICT sector and, by extension, in
  the national economy
• Achieving a substantial change in the racial
  composition of ownership, management and control
  structures as well as in the skilled and
  specialist positions of new and existing
  enterprises
• Increasing the extent to which black women,
  communities, workers, cooperatives and the youth
  participate meaningfully in all areas of the
  sector

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Objectives
BEE in the ICT Industry

• Facilitating access to ICT by black people, the
  rural and urban poor, as well as other
  marginalised groupings, otherwise referred to as
  bridging the digital divide
• Providing skills development and training and
  thereby increasing access to, and participation
  in, the economic activity of South Africa by
  black people
• Providing an enabling environment for
  transparency, fairness and consistency when
  measuring and adjudicating on matters related to
  BEE in the ICT sector

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Challenges facing ICT industry government
BEE in the ICT Industry

• Balancing act of stimulating sustainable economic
  growth and fulfilling the national imperatives of
  economic transformation
• participation by Blacks in areas such as
  management and skills development limited
• lack of co-ordination of initiatives
• industry highly fragmented
• detailed and reliable research on aspects of ICT
  sector does not yet exist or is not readily
  available

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Status of the ICT Charter?
BEE in the ICT Industry

• Working group formed in June 2003
• ICT Indaba in September 2003
• Multinationals position papers caused split
• Research unit has been established to
  investigate and research major issues
• Roadshows completed
• 3rd Draft issued May 2004
• Charter expected to be finalised by July 2004

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Balanced Scorecard
BEE in the ICT Industry

• Covers 7 core pillars
• Equity Ownership
• Management
• Employment
• Skills
• Procurement
• Enterprise Development
• Corporate Social Investment

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3rd Draft of ICT Charter - Summary
BEE in the ICT Industry
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BEE in the ICT Industry
Open Issues

• Weighting
• Minimums
• Targets
• Cross referenced with other industry charters

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BEE in the ICT Industry
Business Issues

• All tenders (public and private) require
  submissions to include your BEE Score
• Equity increasingly becoming competitive
  landscape
• BEE is now a business imperative
• Although compliance with the Charter is
  voluntary, there is a price to pay for
  non-compliance as private public sector will be
  averse to doing business with Charter
  non-compliant companies

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Why invest in South Africa?
BEE in the ICT Industry

• The ICT industry has been identified by the
  government as a key driver of the economy
• Gateway to Africa for applications using new
  technologies
• Satellite, WiFi, Open Source
• South Africa has a well developed infrastructure,
  communications and banking systems
• South Africa is the largest and most advanced ICT
  industry in Africa
• South Africa serves as the gateway into the rest
  of Africa
• As the USA is to the rest of the world, so SA is
  to Africa
• Many multinational companies with markets in
  Africa and Middle East establish regional offices
  in South Africa
• Easy access to the SADC and NEPAD countries

Source US Commercial Service, Industry Sector
Analysis, South Africa ICT Market Overview (2003)
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Experience. Results.