The empowerment charter for the information & communications technology (ICT) sector, could be completed by July. It's hoped it will become official policy later this year.
But much needs to be done to reach consensus and ensure that the final draft meets government's broad criteria for black economic empowerment (BEE).
A lot is at stake: according to research firm BMI-TechKnowledge, total IT spend in SA last year was R43bn, or 3,7% of GDP. And the charter covers not only IT but the telecommunications, broadcasting and electronics sectors.
Though government has not intervened in the process, communications minister Ivy Matsepe-Casaburri has threatened to impose government's will if players do not reach consensus.
Hasmukh Gajjar, a member of the ICT charter working group, says there is still much to be done. Recently, additional input was sought from regions outside Gauteng, where the initial workshops were held. The idea, Gajjar says, was to make other constituencies aware of the process and seek their input.
A first draft or framework, consisting of subjects for discussion as well as a set of definitions, was released in early March. Rather than making specific recommendations, this draft is aimed at encouraging structured debate. Gajjar says it is not the role of the working group to develop the charter. It exists to facilitate discussion and help ensure consensus.
Various drafts will then be drawn up, and a final charter will be tabled to government. Government will determine whether there was, in fact, sufficient consensus and that the charter supports its broad empowerment policies. It will provide further input, if necessary. The charter will then be formally adopted by the industry.
Gajjar says he hopes all this will happen this year. The longer it takes, the more uncertainty it will create, he says. But others, such as BMI-TechKnowledge director Mark Walker, are concerned that the process is already moving too slowly.
"We're not as far down the line as we should be," he says. "The danger is that if the industry is seen to be dragging its heels, government will tell it what to do. That will result, at best, in a less than optimal structure for empowerment in the industry."
Key elements of the charter are likely to include equity ownership, the need to reduce disparities in race and gender, job creation and ways of assisting and growing the pool of black talent.
The industry, Walker says, realises it has no choice but to reach consensus. Equity participation could be a big sticking point, though. Many of the multinational IT companies have indicated they are not prepared to sell equity in their local operations. Some have even suggested that they could disinvest if this were forced on them.
IBM SA MD Mark Harris says he is concerned about the process and wants the multinationals to be given the opportunity to provide further input once proposals have been produced.
"Most of the multinationals are worried about how we will be represented," Harris says. "Hopefully our input will be considered because if we are forced to sell equity, it would be disastrous."
Walker says the issue must be handled delicately.
"The big international players own a lot of the game and we can't afford to alienate them. There's a need to look at other options."
Those options could include equity equivalents, where they'd earn points by, for example, putting more money into corporate social investment. Many participants in the process are advocating the use of a balanced scorecard approach to achieve this.
Another option, says Datacentrix executive chairman Gary Morolo, is for the charter to encourage multinationals to work more thoroughly with a local channel of resellers and particularly with resellers that have strong empowerment credentials. Though most multinationals already work through a channel of some description, some still sell directly to the big corporate buyers. By encouraging them to work through partners, the issue of equity participation goes away, Morolo says.
But Morolo lashes out at government, saying some departments are hurting the resellers in SA by demanding to work exclusively with original equipment manufacturers. Government, he says, incorrectly argues that it's cheaper to work directly with the multinationals.
Transformation in the IT sector has been slow. The pace of change is picking up now, though, with some of the bigger players in the market - Comparex and Bytes Technology Group - recently concluding deals. Dimension Data has also announced its intention to sell 25% of the equity in its SA business. Ex-department of communications DG Andile Ngcaba is driving the process.
A number of reasons have been put forward to explain why the industry has been slow in transforming itself. They include the depressed state of the market after companies slashed their IT spending in the wake of the Y2K and dot-com bubbles. Also, attracting youngsters to study computer science is challenging, given that the industry has lost a lot of the allure it had in the 1990s.
However, David Redshaw, CEO of Bytes, an Altron subsidiary, says there is no shortage of junior skills. The problem, he says, is that there are few black people with specialist skills and years of IT experience. There's also a lack of managerial talent, he says, and this takes time to nurture.
Others are more critical, saying companies have not done enough to grow black talent. They say these companies are starting to act only now, when they should have been developing these skills years ago.
