Delays in processing multinational investment applications by the B-BBEE ICT Sector Council have put potential funding, skills development and business opportunities at risk for South African small businesses.
An investigation by the Department of Communications found that applications from technology companies IBM and Oracle were delayed because of weak processes and governance at the council. The delays affected programmes designed to channel multinational investment into enterprise development, skills and other areas of South Africa’s ICT economy.
IBM’s application to expand its existing R700 million Equity Equivalent Investment Programme (EEIP) was held up for several months, while Oracle’s application remained with the council for approximately six months, according to Communications Minister Solly Malatsi.
EEIPs allow multinational companies to invest in areas such as enterprise development, skills development and education instead of meeting certain B-BBEE ownership requirements.
These investments can translate into funding, training, technology support and opportunities for smaller businesses to build relationships with larger companies.
“The report concluded that the Council was dysfunctional in processing EEIP applications due to the absence of clear governance processes and monitoring mechanisms,” Malatsi said.
Delays can hold back business opportunities
IBM’s original R700 million EEIP, launched in 2015, was aimed at supporting enterprise development and ICT skills.
The programme included support for black-owned businesses, black women-owned businesses and young people, as well as full bursaries for 56 students studying computer science at the University of the Witwatersrand.
IBM later applied to expand its investment, but the application was delayed for several months.
Oracle’s application was also held up for about six months.
The investigation found that the council had no comprehensive EEIP process or standard operating procedure for dealing with applications. There were also no standard templates or evaluation tools, while applications were assessed inconsistently.
The longer applications remain unresolved, the longer businesses have to wait for funding, training and enterprise development support linked to multinational investment.
Delays can also make it harder for smaller companies to plan around partnerships and programmes that could help them build skills, capacity and access to larger markets.
Governance problems affect investment
The investigation also found weaknesses in the council’s financial governance and controls.
Malatsi said there was no approved financial management framework and that financial reporting largely consisted of bank statements rather than proper management accounts.
Expenditure was authorised by a person who was not a council member, while former council members remained signatories on the bank account after a new council had been appointed.
Although some allegations of fruitless and wasteful expenditure were not confirmed, the investigation found wider problems with financial reporting, expenditure authorisation and the finance subcommittee.
These weaknesses can affect confidence in a system responsible for processing investment programmes involving multinational companies.
When applications take months to process, investment programmes can lose momentum while businesses waiting for support remain in limbo.
Leadership changes aim to restore confidence
The department has since moved to change the council’s leadership.
Council chairperson Minki Mazibuko-Thulo was relieved of her duties, while Loyiso Tyira was appointed interim chairperson and William Ledwaba interim deputy chairperson for six months.
Malatsi said the changes followed concerns raised by current and former council members and stakeholders, as well as the findings of the investigation.
The interim leadership will serve while the department works on the longer-term reconfiguration of the council.
The focus now is whether the changes will improve the speed and consistency of the investment approval process.
A more efficient system could help multinational companies move investment into enterprise development, skills and technology programmes faster, allowing more businesses and young people to benefit from opportunities linked to South Africa’s ICT sector.
