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Cape Town - Government departments will increasingly make black economic empowerment (BEE) an essential component of their operations by including, for instance, strict requirements for ownership and staff composition in industry-specific legislation, rather than making companies adopt voluntary industrial codes as is currently the case, reckon empowerment consultants.
The government will begin to bring all existing legislation into line with the Broad-Based Black Economic Empowerment Act.
This will have a particularly heavy impact on companies that depend on government spending, or that require licences to do business in specific industries.
For example, the Preferential Procurement Act has already been moulded to give greater consideration to empowerment status when awarding state tenders.
This was the beginning of a trend that will put empowerment squarely at the heart of government activities, including state purchasing and licensing.
Wherever government has points of contact with the private sector, empowerment requirements will start to be enforced through legislation rather than voluntary codes, observes Bravura Consulting partner Ajay Lula.
Sandile Hlophe, a managing partner at KPMG, says the Empowerment Act obliges state departments and institutions to take BEE requirements into account when licences are awarded to companies to do business in a specific industry.
Any industry in which companies need to obtain or renew licences from government will be increasingly subjected to these rules.
Industries that will be affected by amendments in industry-specific legislation to comply with the Empowerment Act include information technology and communication (ICT), financial services and mining.
Regulations already oblige the mining industry to comply with certain empowerment requirements to qualify for mining or exploration rights.
Communications director-general Momaduphi Mohlala has indicated that similar stipulations will also be contained in the Electronic Communications Act, forcing players in the ICT and broadcasting industries to conform to empowerment requirements if they want to be licensed, Business Day reported on Tuesday.
Anyone wishing to qualify for broadcasting or telecommunications licences or spectrum will, in terms of legislation, need to have 30% black ownership and a minimum number of black members both on its board and at executive management level, says Mohlala.
It seems a foregone conclusion that large telecommunications players like Vodacom will have to revise their empowerment deals to increase their shareholding in black hands.
The ICT industry's empowerment code provides for a 30% stake or a maximum of R7.5bn to be sold to black shareholders. There has, however, been tremendous opposition from government regarding the R7.5bn clause, which applies only to the ICT industry.
The ICT empowerment code, expected to be published in the Government Gazette soon after which it will come into force, will not contain the R7.5bn clause, it is understood. Other than Vodacom, MTN - which is to announce another empowerment deal this year - will be forced to revise its empowerment plans to comply with the new regulations.
On Tuesday industry participants said it was telecommunication players, in particular, that would struggle to conform to the new regulations, which are expected to come into force before the Independent Broadcasting Authority of South Africa holds its long-awaited spectrum auction.
The much-anticipated spectrum to be auctioned is ideally suited to the use of WiMax - technology that can be adopted for cheaper broadband internet access.
- Sake24.com
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