New BEE rules planned for South African ICT companies

https://businesstech.co.za/news/technology/432062/new-bee-rules-planned-for-south-african-ict-companies/

https://mybroadband.co.za/news/telecoms/366554-new-black-ownership-rules-for-south-african-isps-and-telecoms-companies-here-soon.html

The Independent Communications Authority of South Africa (Icasa) says it plans to introduce new BEE regulations for the Information and communications technology (ICT) sector before the end of the 2020/2021 financial year.

In February, the regulator published the draft employment equity regulations. The purpose of the draft regulations is to ‘promote equity ownership by Historically Disadvantaged Persons and to promote Broad-Based Black Economic Empowerment (B-BBEE)’.

In a presentation to parliament on Friday (4 September), Icasa said that the draft regulations seek to impose the following regulations, amongst others:

• A requirement for all existing licensees to comply with the mandatory equity ownership requirements, 30% equity ownership by black people and level 4 BBEEE status, within 24 months of the promulgation of the regulations;

• Penalties of up to R5 million of 10% of the licensees annual turnover where a licensee fails to maintain the mandatory minimum requirement;

• A requirement for annual compliance reporting on the state of equity ownership by black people in the licensee.

Faster transformation needed

Data published by Broad-Based Black Economic Empowerment (B-BBEE) Commission at the end of July shows a slight change in the levels of transformation, with the overall black ownership reflecting a four percentage point increase from 25% black ownership in 2018 to 29%.

Only 3.3% of entities listed on the JSE are 100% black-owned, which was 1.2% in 2018 and 1% in 2017, the commission found.

The three worst-performing sectors on ownership in 2018 were AgriBEE (11.19%), media, advertising and communication (19.55%) and finance (21.64%).

The commission said that there are also worrying trends observed over the three-year period between 2017-2019.

“Though black ownership indicates slight change, the black ownership percentage does not always correspond with the management control scores,” it said.

“For instance, an entity is able to score full points for ownership and very low on management control, which gives the impression that despite black ownership recorded, black people are not involved in the control and core operations of the measured entity.

“Also, the saturation of management control points is still between junior and middle management, also noting the rotation of black executive from one measured entity to another, without utilising the skills development element to create a pipeline of new black executives.”

The group said that for real and accelerated broad-based black economic empowerment to be achieved, the B-BBEE Act must be applied consistently by both the private and public sector, particularly in regard to section 10 and section 13G of the B-BBEE Act, which are mandatory.

“Also, ownership, skills development and enterprise and supplier development are priority elements, however, performance overall is not satisfactory.”