The Department of Telecommunications and Postal Services briefed and asked the Committee to support and approve the ratification of two international treaties.
First, the Department briefed the Committee on the International Telecommunications Union (ITU) Plenipotentiary Conference that took place in Mexico in 2010. Amongst other things, the conference advanced the conversation around cyber security, and reviewed outdated regulations. South Africa played a leading role when it came to internet governance, child online protection, and other issues affecting developing countries. The outcomes and implications of the conference were that the DTPS would follow the process of ratification thereby making the treaty binding, a membership fee of 1 272 000 Swiss Franc’s will be paid annually. The Committee ratified the treaty.
Second, the Department presented on the African Telecommunications Union. The benefits of ratifying ATU include the facilitation of infrastructure programmes and priorities, Human Resource Development, business and industry development, and local content development. South Africa serves in the ATU Administrative Council. DTPS currently pays a membership fee of 75 000 dollars annually. The Committee ratified the treaty.
The B-BBEE ICT Sector Council reported that it was officially launched on the 8th of November 2016.The composition of the Council represented a broad spectrum of stakeholders in the ICT sector. The Council was the custodian of the B-BBEE ICT Sector Code. The Council provides guidance on sector specific matters affecting B-BBEE in entities in the sector and oversees, supervises and promotes adherence to the Amended Sector Code, this is done on an interactive basis between companies and the Council. The emphasis in this Amendment is SMME development. The committee sought clarity as to what constitutes ownership, how ownership is monitored in listed companies, how the Council members are remunerated, and who paid this remuneration. The committee also sought clarity as to what was being done to address skills development as this is integral to the ICT sector, as well as what incentives were there to comply with B-BBEE as it was not compulsory.
The Chairperson thanked all those present for being in attendance. She then allowed for apologies to be read out and asked the presentations to begin.
Remarks by Minister
Dr Siyabonga Cwele, Minister of Telecommunications and Postal Services, said that he would provide context and background of the presentations that would take place. He explained that the International Telecommunications Union (ITU) Conference in Mexico advanced the conversation around cyber security, and reviewed outdated regulations. The importance of the African Telecommunications Union (ATU) gave the continent a platform beyond simply being part of region one of ITU, so it can push an African agenda. The Broad-Based Black Economic Empowerment (B-BBEE) Information and Communications Technology (ICT) Sector Council presentation would give the Committee an idea of the challenges faced by the council and the sector as a whole.
Ratification of the ITU Plenipotentiary Conference 2010
Mr Jim Paterson, Multilateral Director, Department of Telecommunications and Postal Services (DTPS), explained that the conference was the top policy making body of the ITU. The conference was held every four years, and elected the senior management team of the ITU Council. The work of the ITU aligns closely with Chapter 4 & 7 of the National Development Plan, as it is strongly focused on the development of Economic Infrastructure in the ICT sector. In addition, the ratification of the Final Acts of the Plenipotentiary Conference is in line with South Africa’s foreign policy, in particular strengthening the rules based multilateral system.
Key points of discussion were:
International Telecommunications Regulations (ITRs)
Internet protocol based networks
International public policy issues pertain to internet and management of Internet resources including Internet resources, including domain names and addresses
Role of administrations of Member states in the management of internationalized (multilingual) domain name
Mr Paterson mentioned that South Africa played a leading role when it came to internet governance, child online protection, and other issues affecting developing countries.
The outcomes and implications of the conference were that the DTPS would follow the process of ratification thereby making the treaty binding, a membership fee of 1 272 000 Swiss Franc’s will be paid annually.
The Department asked Parliament to consider, support and approve the Ratification of ITU Plenipotentiary Conference (Final Acts) 2010, in terms of Section 231 (2) of the Constitution.
Mr C Mackenzie (DA) asked if South Africa was rated as a developed or a developing country and if this informed the country’s positions.
Ms M Shinn (DA) asked if the various legal concerns raised by the legal advisers were taken note of regarding articles 23-30, and finances of the union. Was this budget discussed, has a budget been drawn up to meet the various financial implications? She asked how many member states ratified the treaty, and the status of the previous African Union cyber-security treaty.
Mr K Siwela (ANC) asked what the benefit of the treaty would be, and if the DTPS had implemented any of the resolutions taken at the conference.
Ms Nonkqubela Jordan, Acting DDG: ICT International, DTPS, responded that there was an alignment between the National Cyber Security Bill and global principles. The annual fee was being paid by the Department. Regarding the AU convention on cyber-security eight member states had signed the treaty to date with one ratifying.
Mr Paterson said that South Africa defined itself amongst the African countries so it pushed the interest of developing countries.
The Minister responded that in terms of financial implications, the financial obligations would be thoroughly analysed and interrogated.
Mr Paterson said that the main obligation was membership, whereas all others are optional and are dependent on participation in meetings, committees, and programmes.
Ms Jordan responded that when coming back from the ITU all relevant entities were engaged regarding alignment, particularly ICASA. ITR’s are being incorporated in the ICT white-paper. On the internet protocol there had been progress regarding domain names, and the promotion of indigenous languages to ensure broader access. There had been progress as evidenced by Google being available in isiZulu for example. There was however a lot more that can still be done. DTPS was working with the Department of Environmental Affairs to help limit climate change.There have been regional meetings where progress reports are given.
The Chairperson read out the report from the ITU Plenipotentiary Conference 2010, so that it could be adopted.
The report was adopted. The DA reserved its position on the adoption.
Ratification of African Telecommunications Union (ATU) Convention of 1999
Ms Zanele Makam, Africa Multilateral Director, DTPS, explained that the ATU was founded on 7 December 1977 as a Specialized Agency of the OAU, in the field of telecommunications. Following South Africa’s independence in 1994, South Africa took the decision to join ATU in line with foreign policy objectives of pursuing the developmental agenda and promoting the African Renaissance, including strengthen African institutions and prioritizing Africa.
South Africa is one of 45 member states of ATU, having signed the ATU Convention & Constitution in 1999 during the Extraordinary Plenipotentiary Conference hosted in Cape Town. It was at the same forum that ATU transformed from Pan African Telecommunications Union (PATU), whose focus was primarily a coordinating body for government related activity; and the transformation set to include private and public stakeholders in the information and telecommunications technology sector.
When South Africa signed the ATU Convention and Constitution, the OAU was still in existence and ATU was recognised as its specialised Agency for the implementation of continental ICT programmes. The ratification was delayed due to legal clarification on the recognition of Specialised Technical Agencies of the OAU under the AU.
South Africa is also intending to put up candidatures for elective positions at ITU and ATU in 2018. South Africa remains active, more especially in the spectrum programmes and coordination, having served as Chapter Coordinator and Rapporteur for Africa and still serves in the African Working Group for World Radiocommunications Conference (WRC).
The work of the ATU aligns closely with Chapter 4 &7 of the National Development Plan, as it is strongly focused on the development of economic infrastructure in the ICT sector.
The ATU is a strategic organisation that South Africa would like to use as an influence platform for the telecommunications/ ICT development in Africa. South Africa remains active in ATU forums by providing guidance and strategic leadership and taking up leadership roles and responsibilities. South Africa currently serves in the ATU Administrative Council.
There are no financial implications with respect to the ratification of the ATU Convention. However, South Africa through the Department may be requested to host meetings or conferences of ATU. Should such request be made, the Department will follow all the necessary protocol requirements in the hosting, in line with the applicable legislation governing such requests.
DTPS, on behalf of the Republic, pays membership fee as a standard obligation by all member states and associate members. The current membership which DTPS pays is seventy five thousand US dollars ($75 000) per annum.
The Department asked Parliament to request Parliament to consider, support and approve the Ratification of ATU Convention which South Africa became signatory of in December 1999. This in line with Section 231 (2) of the Constitution of the Republic of South Africa.
Mr Mackenzie asked for examples of Human Resource Development, Business Development and Content Development carried out by the ATU.
Ms Jordan responded by pointing out how companies associated with ATU piloted new projects through the programme including smart schools and smart learning. Capacity building programmess were held quite regularly to increase spectrum management, spectrum planning, and capacity building amongst others. A new online platform had also been developed which is similar to IT web but one designed for the African community.
The Chairperson read out the report from the African Telecommunications Union (ATU) Convention of 1999, so that it could be adopted.
The report was adopted. The DA reserved its position on the adoption.
Briefing by B-BBEE ICT Sector Council
Ms Nokuzola Ehrens, Chairperson, B-BBEE ICT Sector Council, told the committee that the B-BBEE ICT Sector Council was established on the 24th of September 2015. Since its establishment the council has:
Consulted with the ICT Industry as part of the process to Amend the Sector Code
Subsequently finalized the Amended Sector Code which was published in the Government Gazette on 7 November 2016
Completed the Interim Sector Monitoring Report
Interacted with various stakeholder to provide guidance on the implementation of the Amended Sector Code which took effect from the date of publication
The composition of the Council represents a broad spectrum of stakeholders in the ICT sector, with the stakeholders coming from the, the broadcasting sub-sector, electronics sub-sector, telecommunications sub-sector, information technology sub-sector, sector regulators, and organised labour and social partners consisting of: youth, people with disabilities, and women. Out of these groups there a 16 members on the Council, it must be made clear that some of the nominations came from the associations and industry, but it must be made clear that although the councillors are nominated they do not owe their nominators anything they serve the industry as a whole.
The Council is the custodian of the B-BBEE ICT Sector Code and has a number of objectives and obligations. These include advising the organs of the state on all matters relating to B-BBEE in the ICT sector, and monitoring and reviewing the implementation of the ICT Sector Code, this often entails summoning companies to present their ownership composition, as there is often confusion as to what does and does not constitute ownership. B-BBEE compliance is not forced, it is voluntary. What the Council does is assist and guide those companies who decide to adopt it. The Council develops and fosters common standards and codes of ethics in the implementation of ICT Sector Code’s, and also assesses, evaluates and commissions research on specific areas where research is not available. The Council provides guidance on sector specific matters affecting B-BBEE in entities in the sector and oversees, supervises and promotes adherence to the Amended Sector Code, this is done on an interactive basis between companies and the Council. The Council aims to strengthen and foster collaboration between the public and private sector, as the Sector Code applies to both the public and private sector. The Council maintains a registry of major B-BBEE transactions in the sector.
Mr Andile Tlhoaele, Deputy Chairperson, B-BBEE ICT Sector Council, explained that the Code was designed to implement the B-BBEE Act of 2013. For the past few months the work of the Council has revolved around the implementation of the ICT Sector Code. The Code has five elements, they are, ownership of companies (extent to which black people in terms of the act own companies in the sector), management control (the extent to which black people in terms of the act manage operations in the sector), skills development (the extent to skills development is provided to black people and generically African people), enterprise supply development (establishing start companies and ensuring companies can improve their capability of being part of the supply chain), and socio-economic development (bringing black people into the mainstream ICT sector). The emphasis in this Amendment is SMME development, as it touches on a lot of areas in terms of value chains. We encourage joint ventures and partnerships between large companies/suppliers and SMME’s.
Mr Mackenzie asked in terms of trust ownership, what informs the Councils position. The reason why the question is asked is because Trusts are a good way of ensuring that the shares of the company are kept in the company. How did the Council monitor BEE ownership of a listed company, given that they are constantly changing. When you say you consulted with the ICT companies, did you consult with foreign owned ICT companies? What is the remuneration for Council members, and who pays them?
Ms Shinn asked what concerns the ICT sector expressed which the Council was unable to accommodate, and why was the Council unable to accommodate these concerns. The qualifying small enterprises with turn-over less than R50 million have to have 75% black beneficiaries of the company, does this mean that very few of these companies qualify on a level one qualification, wouldn’t this exclude many small companies from being part of the procurement chain, does this not go against what the Council is trying to achieve?
How does the Council verify the skills levels of the people in the company’s on the register? The main concern which has been raised over the years by the ICT industry has been a lack of skilled people, particularly when it comes to Maths and Science. What is being done to work with the Department of Basic Education to boost the skills of students?
Mr Siwela asked what the Council identified as challenges to B-BBEE being adhered to.
Ms N Ndongeni (ANC) asked what incentives are there to participate and adhere to the code since it was not compulsory.
Ms Ehrens responded that when talking about ownership there are a number of requirements which can include, voting rights, being able to impact on the company’s operations and receiving dividends. There are also equity equivalent programmes used by the likes of IBM. On consultation, the Council was working with and through the Department of Trade and Industry (DTI). Telecom sectors have come to the Council to engage. The Council has had lengthy engagements with the industry.
Ms Ehrens stated that remuneration was a point of contention. When the Council was established the idea was that the DTPS would fund 50% of the work and the industry would fund the other 50%. At the moment the industry contributes nothing and the DTPS everything. Currently the Council was looking at new funding models so that it can be more independent.
Mr Tlhoaele explained that for a qualifying small enterprise you need to be 51% black owned. To qualify for level one you need to be 100% black owned or more than 51% black women owned. Regarding challenges from the beginning the industry was very appreciative of the work the Council did. The input the Council received came in two forms the one was that the Code needed to be reviewed and the other was that it be aligned.
Ms Ehrens said that the Council came into existence 18 months ago with a lot of work still needing to be done. Last year the Council began to compile a list of SMMEs and service providers. This is still a work in progress. In terms of skills development the Council will be working with the Department of Basic Education, and is working with universities. So far the Council has provided 20 females full scholarships to study IT. Of the 18 who wrote 15 made it to the following year. This programme will be repeated this year for a new set of females.
Ms Ehrens admitted there were misunderstandings as to what constitutes ownership and this was a problem and a challenge. When it came to management control, a lot of black people are in middle and junior management and rarely make it to senior or executive roles. What the Council has found is that the State Owned Enterprises (SOE’s) are pushing beyond this, the private sector needs to mirror this. The excuse given by multi-national companies is that they must adhere to the global-body’s structures, this has been a challenge.
Mr Tlhoaele responded that in terms of challenges many companies who support SMME’s create funds to get B-BBEE points, but do not distribute funds to black owned SMME’s.
Mr Tlhoaele wanted the committee to note two timelines, on the 24th of October 2014 the BEE Act was implemented. On the 7th of November 2016 the Minister for the DTPS signed amended the code into existence. Since then all programmes are implementable.
Ms Ehrens responded that in terms of incentives companies want to be seen as complying, so that they get the necessary BEE and B-BBEE levels and the benefits that go along with them.
Mr Tlhoaele responded that is if you don’t comply your company has a high chance of becoming uncompetitive, as you will not receive the benefits your competitors who do, receive.
The Minister responded that when it comes to SMME’s many companies who qualify and have the skills, still do not receive the opportunity to participate. According to his estimation, the Council has the full support of the industry.
Mr Mackenzie asked how much of the DTPS budget was allocated towards the Council. What is the planned allocation for next year? How do you work out how much of a listed company is owned by black people? If a company loses black owners taking it below the BEE threshold, does the company keep their BEE accreditation?
The Minister responded that the budget was a little, around R 2 million. Because the Council is new the budget projection will be based on planned activities.
Mr Tlhoaele responded that if you exit a company the company can not benefit from your BEE accreditation unless you are paid dividends. How listed companies are treated is guided by the DTI. There are two concepts, direct empowerment and indirect empowerment, there are rules how you measure these two concepts, which speaks to listed companies.
The Chairperson thanked the DTPS and the Committee. She mentioned that the issues of cyber-security and the development of skills and SMME’s was important.
Adoption of Minutes
Minutes were adopted for the committee meeting on the 8th of November 2016.
Minutes were adopted for the committee meeting on the 15th of November 2016.
The meeting was adjourned.
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