1 / 17

The ICT Charter: Principles which address the full range of BEE requirements, including the equity Issue for Multinatio

The Information & Communications Technology Industry. The ICT Charter: Principles which address the full range of BEE requirements, including the equity Issue for Multinationals. Andrew Jackson & Ken Robinson - September 16/17, 2003. Introduction.

bianca
Download Presentation

The ICT Charter: Principles which address the full range of BEE requirements, including the equity Issue for Multinatio

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Information & Communications Technology Industry The ICT Charter: Principles which address the full range of BEE requirements, including the equity Issue for Multinationals Andrew Jackson & Ken Robinson - September 16/17, 2003

  2. Introduction • This presentation defines principles for the ICT Industry Empowerment Charter • Facilitated • as a service to economic & social development in SA • by Accenture, Cisco, Dell, EDS, HP, IBM, InterSystems, Microsoft, Novell, Oracle, Sun Microsystems, Veritas, & others (to be confirmed) • Many pending formal approval by global governance • Objective • to provide input to a comprehensive consensus process • to achieve BEE in the industry

  3. 10. Compliance recognised in public sector 1. Aligned to DTI Scorecard 9. Auditable compliance 2. Challenge: ICT Skills 8. Achieve BEE over 10 years 3. Recognise foreign company contribution 4. Challenge: 100% subsidiary policy 7. Challenge: Enterprise Development for Service Co’s 6. Comply through Equity Equivalents 5. Recognise Black equity imperative Principles • Based on DTI “Strategy” document • Uses Code of Practice (“Scorecard”) approach • Designed to achieve Broad Based BEE

  4. 1. Aligned to DTI Scorecard 9. Auditable compliance 8. Achieve BEE over 10 years 3. Recognise foreign company contribution 4. Challenge: 100% subsidiary policy 7. Challenge: Enterprise Development for Service Co’s 6. Comply through Equity Equivalents 5. Recognise Black equity imperative Principles • Major BEE Challenge is ICT skills development • To be recognised in skills & residual components of Scorecard 10. Compliance recognised in public sector 2. Challenge: ICT Skills

  5. 1. Aligned to DTI Scorecard 9. Auditable compliance 2. Challenge: ICT Skills 8. Achieve BEE over 10 years 3. Recognise foreign company contribution 4. Challenge: 100% subsidiary policy 7. Challenge: Enterprise Development for Service Co’s 6. Comply through Equity Equivalents 5. Recognise Black equity imperative Principles • Contribution of 100% foreign owned companies: • Support global competitiveness • Enhanced competition & choice • Gateway to Africa • Employee skills transfer • Performance guarantees 10. Compliance recognised in public sector

  6. 1. Aligned to DTI Scorecard 9. Auditable compliance 2. Challenge: ICT Skills 8. Achieve BEE over 10 years 3. Recognise foreign company contribution 4. Challenge: 100% subsidiary policy 7. Challenge: Enterprise Development for Service Co’s 6. Comply through Equity Equivalents 5. Recognise Black equity imperative Principles • Major BEE challenges in 100% subsidiary policy • Governance • Organisation • Intellectual capital • Foreign shareholder pressure • Employee share schemes 10. Compliance recognised in public sector

  7. 1. Aligned to DTI Scorecard 9. Auditable compliance 2. Challenge: ICT Skills 8. Achieve BEE over 10 years 3. Recognise foreign company contribution 4. Challenge: 100% subsidiary policy 7. Challenge: Enterprise Development for Service Co’s 6. Comply through Equity Equivalents 5. Recognise Black equity imperative Principles • Recognise Black Equity Objectives • Control over resources • Reinvest in SA • Share in wealth • Meaningful black management positions 10. Compliance recognised in public sector • Recognise challenges • Financing • Tradeability • Quoted share free float

  8. 1. Aligned to DTI Scorecard 9. Auditable compliance 2. Challenge: ICT Skills 8. Achieve BEE over 10 years 3. Recognise foreign company contribution 4. Challenge: 100% subsidiary policy 7. Challenge: Enterprise Development for Service Co’s 6. Comply through Equity Equivalents 5. Recognise Black equity imperative Principles • Equity Equivalents to achieve objectives of Black equity through: • Investment in BEE Co’s • New capital in SA • Retained dividends • Foreign sourced revenues • Black share of consortium revenues • Black employee shares • With Black board members 10. Compliance recognised in public sector

  9. 1. Aligned to DTI Scorecard 9. Auditable compliance 2. Challenge: ICT Skills 8. Achieve BEE over 10 years 3. Recognise foreign company contribution 4. Challenge: 100% subsidiary policy 7. Challenge: Enterprise Development for Service Co’s 6. Comply through Equity Equivalents 5. Recognise Black equity imperative Principles • Challenge in Enterprise Development • Product co. knowledge capital builds channels • Service co. knowledge capital builds competitors • Propose reassign target score 10. Compliance recognised in public sector

  10. 1. Aligned to DTI Scorecard 9. Auditable compliance 2. Challenge: ICT Skills 3. Recognise foreign company contribution 8. Achieve BEE over 10 years 4. Challenge: 100% subsidiary policy 7. Challenge: Enterprise Development for Service Co’s 6. Comply through Equity Equivalents 5. Recognise Black equity imperative Principles • Use all DTI BEE components • Phased in over 10 years • “Residual” linked to skills development 10. Compliance recognised in public sector

  11. 1. Aligned to DTI Scorecard 2. Challenge: ICT Skills 9. Auditable compliance 8. Achieve BEE over 10 years 3. Recognise foreign company contribution 4. Challenge: 100% subsidiary policy 7. Challenge: Enterprise Development for Service Co’s 6. Comply through Equity Equivalents 5. Recognise Black equity imperative Principles • Govt. to confirm Charter • Approved Industry Associations to interpret • Statutory auditor’s certificate 10. Compliance recognised in public sector

  12. 1. Aligned to DTI Scorecard 10. Compliance recognised in public sector 9. Auditable compliance 2. Challenge: ICT Skills 8. Achieve BEE over 10 years 3. Recognise foreign company contribution 4. Challenge: 100% subsidiary policy 7. Challenge: Enterprise Development for Service Co’s 6. Comply through Equity Equivalents 5. Recognise Black equity imperative Principles • Compliance recognition • Legislation provides for equal Charter status • Only BEE entry requirement in public sector procurement • Reciprocity between charters

  13. The Black Equity Imperative • Strategy Statement • “The process of BEE must result in an increase in the ownership and control of the economy by black persons.” • What are the Objectives of Direct Empowerment (black equity)? • For appropriate control over allocation of resources • To reinvest in SA • To share in wealth creation & profits • To support meaningful positions for black management • Charter Principle • Contribute to equity through an “Equity equivalent” (possible without selling equity)

  14. Equity Equivalents • Cost of Accommodation assumption • The sale of equity to black investors would entail a cost to the company which can be valued. • Cost of accommodation at 20% of the equity value transferred to black investors, similar to the Khulisa share offer by Telkom in 2003. • Equity Equivalents assumption: • The four Objectives of Direct Empowerment can be achieved through “Equity Equivalents” . • Equity Equivalents can be valued. • Then value of Equity Equivalents can be compared to the cost of a sale of equity .

  15. Equity Equivalents

  16. Equivalent Value • Value of Equity Equivalents • = Cost of accommodation • = 20% x Equity % x Value of Co. • Company value (applicable to any company) as • EITHER the capitalization on the stock exchange • OR the parent company “Price to Turnover ratio” applied to the turnover of the local subsidiary • OR a hybrid measure equal to net assets plus turnover • “net assets” is a measure of the value of real assets • turnover is a measure of the value of goodwill and intangibles • OR assessed by a qualified independent valuer

  17. 10. Compliance recognised in public sector 1. Aligned to DTI Scorecard 9. Auditable compliance 2. Challenge: ICT Skills 8. Achieve BEE over 10 years 3. Recognise foreign company contribution 4. Challenge: 100% subsidiary policy 7. Challenge: Enterprise Development for Service Co’s 6. Comply through Equity Equivalents 5. Recognise Black equity imperative Principles • Our Group offers these principles to the Indaba • in good faith • as an input to future consensus on the ICT Charter • By: • Accenture, Cisco, Dell, EDS, HP, IBM, InterSystems, Microsoft, Novell, Oracle, Sun Microsystems, Veritas, • & others (to be confirmed)

More Related