IBM looks to help other multinationals in BEE compliance

By Ujuh

ICT giant, IBM, seems to be positioning itself to leverage its first mover advantage in rolling out the equity equivalence requirement in South Africa’s Black Economic Empowerment (BEE) programme.

IBM executives expressed an ambition to help other multinationals to meet the special BEE dispensation, equity equivalence.

The equity equivalence principle is a special BEE dispensation designed for multinationals which have a global policy that precludes them from selling equity for BEE purposes. Such firms are allowed to come up with alternative socio-economic development investments that will add up to an equivalent of 25% equity.

IBM’s ambition to help other multinationals comply with the equity equivalence requirement was expressed during a workshop (BEE and Multinationals) organised by IBM and the Department of Trade and Industry (DTI).

Speaking at the BEE workshop last week, IBM SA director Gavin Pieterse said the equity equivalence space represent an enormous development opportunity for all concerned including the implementing firms.

He said the equity equivalence path could unlock about R48bn for the South African economy if concerned multinationals hopped onto the wave.

IBM has become one of the pioneers with a R700m equity equivalence programme approved by the DTI. The IBM programme is focused on three areas, academic financial support, enterprise development and a research programme. All have emphasis towards IBM market focus.

The DTI has reported that the equity equivalence chapter of BEE has so far realised R1bn in investment by seven companies. These companies include well known multinationals like, Microsoft, Dell and HP. The latter number suggests that a large bulk of multinationals have not yet embraced the equity equivalence alternative.

Pieterse explained that the equity equivalence path was not easy and required serious commitment and resources to pull through. He went on to suggest that multinational corporations which are thinking of equity equivalence need not reinvent the wheel and can use already established infrastructure.

If the IBM proceeds into establishing an outward focused equity equivalence service platform, it will be furthering a known trend in the BEE space. There is a couple of cases where firms who from internal BEE initiatives have established best practice and proceeded into outward focused service provision. These will include the Cargo Carriers owners-driver empowerment model and Growthpoint Properties’ small business incubation programme called Property Point.


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