ICT Sector Council Amends B-BBEE Code

1. Councillor Nokuzola Ehrens Chairperson zolaehrens@gmail.com

2. Contents 1. Enterprises in the ICT Sector 2. Introduction of the Councilors 3. The B-BBEE ICT Sector Code 4. Process to Amend the 2012 ICT Sector Code 5. Objectives of the Council @@@@@@@@@@@@@@@@@@@@@@ 1. Amended B-BBEE Sector Code 2. Ownership Element 3. Ownership targets for Non-South African Enterprises 4. Implementing Enterprise Supplier Development (ESD) Initiatives to Support SMMEs 5. B-BBEE Verification Process 6. B-BBEE Compliance and Transformation

3. Enterprises in the ICT Sectors The Councilors were nominated from the following Sub-Sectors: Electronics Information Technology Telecommunications Broadcasting Sector

4. Introduction of the ICT Sector Councillors  The B-BBEE ICT Sector Council was established in October 2015  Minister Siyabonga Cwele launched the Council on 8 November 2016  Councillors  Mrs Nokuzola Ehrens (Chairperson – Women in ICT)  Mr Andile Tlhoaele (Deputy Chairperson - Electronics)  Mr Frank Awuah – Broadcasting Sub-sector  Ms Pheladi Gwangwa - Broadcasting Sub-sector  Ms Sarah-Jane Capazario – Telecommunications Sub-sector  Mr Tshepang Lesiba - Labour  Ms Petronella Linders - Government – DTPS  Mr Lucky Masilela - Telecommunications Sub-sector  Mr Mduduzi Mkhonza – IT Sub-Sector  Mr Richard Poulton - Labour  Mr Gavin Pieterse – IT Sub-sector  Ms Katharina Pillay - ICASA  Ms Morwesi Ramonyai – Youth  Mr Adrian Schofield - IT Sub-sector  Mr Thulani Tshefuta – Community

5. The B-BBEE ICT Sector Code Upon establishment the Council embarked on a process to Amend the B-BBEE ICT Sector Code:  Priority to align with the 2015 Amended Codes of Good Practice  Failure to align the Code would have required the ICT Sector to revert to the Generic Code of Good Practice  Overriding concern to save the Code from being repealed Recognition of the need to robustly foster transformation in the ICT Sector Adherence to the Generic Code guidelines – targets to either be set at the levels of the Generic Code or higher

6. Process to Amend the 2012 ICT Sector Code The Council started the process to Amend the B-BBEE ICT Sector Code:  2012 B-BBEE ICT Sector Code overdue for review  Council worked flat out to amend the Code, within a month  Met the deadline for submitting the draft amended B-BBEE ICT Sector Code (draft Sector Code) on 13 November 2015 for the dti Minister’s approval.  Embarked on consultative process with stakeholders  Draft Sector Code published for public comments on 26 February 2016 ending on 29 April 2016  Industry consultations including Telkom, Vodacom, MTN, Cell C, Neotel, Multichoice, Industry associations, SMME representatives and the DTI Final B-BBEE ICT Sector Code published on 7 November 2016 for implementation

7. Objectives of the Council  The custodian of the B-BBEE ICT Sector Code;  Advise the organs of state on all matters relating to B-BBEE in the ICT sector;  Monitor and review the implementation of the ICT Sector Code and all related matters;  Develop and foster common standards and code of ethics in the implementation of ICT Sector Code;  Assess, evaluate and commission research on specific areas where such research is not available;  Responsible for the accreditation of the national ICT projects aimed at “bridging the digital divide” in conjunction with the existing bodies such as the USAASA, the Digital Divide Partnership, ICASA, the CSIR, trade unions, NGOs and other organs of civil society;  Provide guidance on sector-specific matters affecting B-BBEE in entities in the sector  Compile reports on the status of B-BBEE within the ICT sector

8. Objectives of the Council (Cont) Oversee, supervise and promote adherence to the Amended Sector Code in the interest of the public; Strengthen and foster collaboration between the public and private sector in order to promote and safeguard the objectives of the Amended Sector Code; Receive complaints relating to the implementation of the sector code and refer such complaints to relevant bodies including but not limited to the Line Minister, B-BBEE Commission, Department of Trade and Industry, National Prosecution Authority and Treasury; Maintain a registry of major broad-based economic empowerment transactions in the sector; Promote public awareness of the ICT Sector codes

9. Amended B-BBEE ICT Sector Code - 2016 Executive Summary Cllr Andile Tlhoaele Deputy Chairperson tlhoaele@inforcomm.co.za

10. ICT SECTOR RESOLUTIONS

11. INDEX FOR THE AMENDED B-BBEE ICT SECTOR CODE (AICT) Code Series Code Title AICT000 Framework for measuring Broad-Based Black Economic Empowerment AICT100 Measurement of the Ownership Element of Broad-Based Black Economic Empowerment AICT200 Measurement of the Management Control Element of Broad-Based Black Economic Empowerment AICT300 Measurement of the Skills Development Element of Broad-Based Black Economic Empowerment AICT400 Measurement of the Enterprise and Supplier Development Element of Broad-Based Black Economic Empowerment AICT500 Measurement of the Socio-Economic Development Element of Broad-Based Black Economic Empowerment AICT600 Measurement of Qualifying Small Enterprises of Broad-Based Black Economic Empowerment

13. CODE SERIES AICT000/STT000 1. Objectives of this statement 2. Key principles 3. Application of the Amended B-BBEE ICT Sector Code 4. The Elements of B-BBEE in terms of the Scorecard 5. The Amended ICT Sector Scorecard 6. Enhanced recognition for certain categories of Black People 7. Framework for Reporting by Measured entities and B-BBEE Verification Professionals 8. Adjustment of Thresholds 9. Amendments and Duration of the Amended B-BBEE ICT Sector Cod

14. CODE SERIES AICT000/STT000

17. CODE SERIES AICT100/STT100 1. Objectives of this statement 2. The Ownership Scorecard 3. Key Measurement Principles 4. Broad-Based Ownership Schemes and Employee Share Ownership Programmes 5. Private Equity Funds 6. Not-for-profit Companies (NPCs) and Companies Limited by Guarantee 7. Trusts 8. Options and Share Warrants 9. Equity Instruments carrying Preference Rights

18. CODE SERIES AICT100/STT100 Category Ownership indicator Weighting points Compliance target Voting rights: Exercisable Voting Rights in the Entity in the hands of Black People 4 30% Exercisable Voting Rights in the Entity in the hands of Black Women 2 10% Economic Interest: Economic Interest in the Entity to which Black People are entitled 4 30% Economic Interest in the Entity to which Black Women are entitled 2 10% Economic Interest of any of the following Black natural persons in the Measured Entity. NOTE: The maximum points that can be achieved by any of the following is limited to 3%.

23. 2.1 Skills Development Elements Scorecards Category Skills Development Element Weighting points Compliance Target 2.1.1 Skills Development Expenditure on any program specified in the Learning Programmes Matrix for Black People as a percentage of the Leviable Amount: 2.1.1.1 Skills Development Expenditure on Learning Programmes specified in the Learning Programmes Matrix for Black People as a percentage of Leviable Amount 8 6% 2.1.1.2 Skills Development Expenditure on Learning Programmes specified in the Learning Programmes Matrix for Black People with disabilities as a percentage of Leviable Amount 4 0.3% 2.1.2 Learnerships, Apprenticeships and Internships 2.1.2.1 Number of Black People participating in Learnerships, Apprenticeship and Internships as a percentage of total employees. 4 2.5% 2.1.2.2 Number of Black Unemployed People participating in training specified in the Learning Programme Matrix as a percentage of number of employees 4 2.5% 2.1.3 Bonus points: Number of Black People absorbed by the Measured Entity or in the economy at the end of the Learnerships, Apprenticeship, Internships and Graduate programmes 5 100%

25. CODE SERIES AICT400/STT400 Element AICT400 – Enterprise and Supplier Development Scorecard Points Targets TMPS 2.1.1 PREFERENTIAL PROCUREMENT - B-BBEE Procurement Spend from all Empowering Suppliers based on the B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend 5 80% 2.1.2 Qualifying Small Enterprises 3 15% 2.1.3 Exempted Micro-Enterprises 4 15% 2.1.4 At least 51 % Black owned 9 40% 2.1.5 At least 30% Black Women owned 4 12% 2.1.6 Bonus - from Designated Group Suppliers that are at least 6% Black Owned 2 2% 2.2.1 SUPPLIER DEVELOPMENT Black Owned ICT Entities 10 2% NPAT 2.3.1 ENTERPRISE DEVELOPMENT Black Owned ICT Entities 15 3% NPAT 2.4.1 Bonus points - graduation 1 1.5% NPAT 2.4.2 Bonus points - creating new jobs up to 10% of the workforce directly 1 2.4.3 Bonus points - creating new jobs up to 10% of the workforce directly 2

29. CODE SERIES AICT600/STT600 Element Points Targets AICT200 – Specialised Scorecard AICT300 – Specialised Scorecard AICT400 – Enterprise and Supplier Development Specialised Scorecard PREFERENTIAL PROCUREMENT - B-BBEE Procurement Spend from all Empowering Suppliers based on the B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend 5 80% Qualifying Small Enterprises 4 15% Exempted Micro-Enterprises 5 15% At least 51 % Black owned 11 40% At least 30% Black Women owned 5 12% SUPPLIER DEVELOPMENT 10 2% ENTERPRISE DEVELOPMENT 15 3% AICT500 – Socio-Economic Development 12 1.5%

30. Summary and conclusion Code Series Code Title AICT000 Framework for measuring Broad-Based Black Economic Empowerment AICT100 Measurement of the Ownership Element of Broad-Based Black Economic Empowerment AICT200 Measurement of the Management Control Element of Broad-Based Black Economic Empowerment AICT300 Measurement of the Skills Development Element of Broad-Based Black Economic Empowerment AICT400 Measurement of the Enterprise and Supplier Development Element of Broad-Based Black Economic Empowerment AICT500 Measurement of the Socio-Economic Development Element of Broad-Based Black Economic Empowerment AICT600 Measurement of Qualifying Small Enterprises of Broad-Based Black Economic Empowerment

31. Questions? Feel free to Email zolaehrens@gmail.com OR tlhoaele@inforcomm.co.za THANK YOU

ICT Sector Council Amends B-BBEE Code

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