AMERICAN FIRMS CRITICIZE FOURTH DRAFT OF ICT

UNCLAS SECTION 01 OF 02 PRETORIA 004313 SIPDIS DEPT FOR AF/EPS DKRZYWDA AND AF/S/TCRAIG COMMERCE FOR 4510/ITA/IEP/ANESA/OA/JDIEMOND TREASURY FOR GCHRISTOPULOS, LSTURM, AND AJEWEL DEPT PASS USTR FOR PCOLEMAN AND WJACKSON SENSITIVE E.O. 12958: N/A TAGS: EINV ETRD EFIN ECIN ECON SF SUBJECT: AMERICAN FIRMS CRITICIZE FOURTH DRAFT OF ICT EMPOWERMENT CHARTER REFTEL: A) PRETORIA 3726 B) PRETORIA 2651 C) PRETORIA 2164 D) PRETOIRA 2092 (U) This cable is sensitive but unclassified. Not for Internet distribution. ¶1. (SBU) SUMMARY. The American Chamber of Commerce in South Africa (AmCham) submitted comments on the fourth draft of the Information Communication and Technology (ICT) empowerment charter September 15 to the ICT Charter Working Group. American businesses described the fourth draft as impractical and unworkable. Amcham, acting on behalf of U.S. businesses in South Africa, requested a meeting with Deputy Minister of Communications Roy Padayachee. A fifth draft of the Charter will be submitted for governmental review by the end of September. END SUMMARY. ¶2. (SBU) The American Chamber of Commerce in South Africa (Amcham) submitted comments on the fourth draft of the Information Communication and Technology (ICT) empowerment charter September 15 to the ICT Charter Working Group. The document outlines concerns held by U.S. businesses operating in South Africa. AmCham's document was also sent to the attention of the Deputy Minister of Communications Roy Padayachee. AmCham expects to meet independently with Padayachee to discuss what it perceives to be major flaws in the fourth draft. ¶3. (SBU) In private, several executives of U.S. businesses in South Africa describe the fourth draft as "rubbish", "disappointing", and "completely unworkable." One official said the document, was a "giant leap of impracticality" from the third draft. In public, the companies have identified the following items as the significant issues of the fourth draft: - The scorecard definition of accreditation is incomplete with major omissions, which make impossible any attempt to apply the scorecard to real businesses. - Some targets are punitive and fail to account for special circumstances. - The excessive number of indicators creates unwarranted complexity and inflexibility. - The Charter lacks clarity on issues, which have major industry implications. - The Charter proposes interference in issues, which are of no significance to BEE and may actively prejudice multinational companies. - The appointment and governance of the BEE Council, its rules and procedures, its powers and methods of appeal of its decisions are undefined. - The Charter scorecard contains rigidity and inflexibility, which do not allow for different business models in a widely diverse ICT industry. ¶4. (U) AmCham and several representatives of American firms in South Africa met with Dali Mpofu, Chairman of the ICT Working Group and members of the scorecard drafting team. According to IBM Country Manager, Mpofu acknowledged several of AmCham's points pertaining to the draft's ambiguity regarding scoring and bonus points and said the Working Group would take those into consideration. ¶5. (SBU) Mpofu also indicated that he plans to submit a fifth draft of the ICT Charter to the Minister of Communications by the end of September. The fifth draft would not be available for public comment at that time. Mpofu expects to receive government's feedback by the end of October. He said the BEE Council would be formed between December 2004 and February 2005. According to Mpofu the Council must represent the sector, but should also include labor and include representation from the provinces. (NOTE: The composition of sectoral councils has been a major sticking point in the financial services sector and promises to be a contentious issue in the ICT sector as well. END NOTE). ¶6. (U) Complete text of AmCham's submission to the ICT Working Group will be faxed to the South Africa desk. FRAZER