Mdu Mkhonza – Global IT groups dictate BEE schemes

Mdu Mkhonza - Black IT Forum
Mdu Mkhonza – President of Black IT Forum

Black Economic Empowerment (BEE) was never a true and honest economic transformation tool, particularly in the information technology (IT) sector. The architects of BEE wanted to create a black middle class in order to safeguard their own economic interests.

However, beneficiaries of BEE might argue otherwise. They would argue that without BEE, South Africa would not have seen the emergence of the number of black business leaders who have become role models for many aspiring young black entrepreneurs.

They will argue that preferential procurement policies, especially in government, have enabled them to establish and grow their businesses through tender-preneurship.

But the majority of genuine entrepreneurs and highly-educated individuals from the African section of the population will testify to the total failure of BEE and its programmes.

They will argue that BEE has benefitted a few politically connected elite, tender-preneurs whose success is based on corrupt practices involving government official, big businesses especially multinationals who want to define and dictate BEE initiatives and support programmes.

Some big businesses’ equity equivalents of BEE programmes are just but one example of the arrogance and insensitivity displayed by big businesses.

On the other hand, there will be those who do not believe economic transformation and especially BEE should be forced on them.

They argue that they had built their businesses over many years and therefore cannot allow their ownership and employment practices to be diluted and affected by BEE compliance issues.

In a developmental state, collaboration is the cornerstone of innovation processes. South Africa has a unique attribute – the ability to mobilise people for a particular cause.

The vast inequality that characterises the South African economic landscape is a recipe for disaster, viz. increase in unemployment, crime and possible social unrest.

South Africa needs to channel the energies of the unemployed graduates and the frustrated youth towards the developing of new products and services that will make the country competitive.

The information and communication technology (ICT) sector needs more than an ICT Charter in Knowledge and Enterprise Networks. Many emerging entrepreneurs lack information in order to foster meaningful transformation.

In many cases, the current conferences and summits are unaffordable yet they are valuable in the development of African entrepreneurs and professionals in the ICT sector.

What needs to be done is for conference organisers and sponsors to insist on the representation of African entrepreneurs and professionals in these events through some selection criteria.

A target of 10 percent of the delegates for a particular ICT conference must be African emerging entrepreneurs and professionals.

Supplier databases must be flexible to allow  a periodical registration of new suppliers.

The State Information Technology Agency’s (SITA) three-year cycle of supplier registration must be scrapped and replaced with a six months cycle. Private companies must become transparent in the supplier registration and procurement policies.

Strategic projects – including major investment projects like the Health Information System or the national broadband rollout project – must be identified where clustering of big, medium and small enterprises shall be the implementation strategy.

The diagram below depicts a typical cluster model that can bring about meaningful empowerment and transformation in the ICT sector:

Information Technology Sector
Source: Mdu Mkhonza

The cluster model is one area of focus that has not received the necessary attention in South Africa whereas internationally, this model has had tremendous successes in the past decade and its impact has gone a long way to address issues related to innovation, employment creation, industry competitiveness and economic growth.

Is it not about time that government, the private sector and industry associations come together and map out an implementation strategy for ICT cluster development in South Africa?

Written by: Mdu Mkhonza – President of BITF (Black Information Technology Forum). He writes in his personal capacity.


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