Thank you very much, Deputy Chairperson of the NCOP and also to the hon members. Hon Rayi's question relate to something called the Equity Equivalent Investment Programme of government. Parliament passed the Broad-Based Black Economic Empowerment Act in 2013, and it has the objective of promoting empowerment. The components of empowerment - as hon members may know - include matters like participation in the
ownership of companies through equity or share arrangements. Typically, it means that a company will look to including black South Africans as shareholders. The reason why we have that provision in our Act is so that we can broaden ownership in our own economy and give South Africans who were excluded in large numbers in the past an opportunity to be owners in the economy.
However, there are some foreign-owned companies, what we might call multinational corporations - companies that operates in a number of different legal jurisdictions it would be a company that would not be based only in one country. Some of them have no specific local ownership. They would only be a global entity, perhaps listed on the New York Stock Exchange or it may even be a family-owned business but it has no direct equity partnership arrangements. In a case like that they don't comply with our black economic empowerment, BEE, codes.
What we have done as government; we have said in those instances where it can be proven that those companies have no equity partnership arrangements in any other country - in other words, it is a global position of the company - the codes can make provision for recognising other things that the company does that is equivalent to equity in the company. Such contributions, which we
refer to as equity equivalent contributions, would be things like the additional money that the company spends on enterprise or supplier development in promoting a black-owned company that is a supplier to the multinational corporation or critical skills development; the development of, say, black South Africans in skills areas are in great shortage and where it would ordinarily not be done, or in research and development boosting the innovation base of our economy, or in the black industrialist programme actively supporting companies run and owned by black South Africans in the productive sectors of the economy.
So, that is the alternative to the equity provision. It would normally entail a verification process to see whether the company actually complies and the staff of the department would then put a request to the Ministry that the Minister must approve a transaction to give an equity equivalent. Then, there will be a negotiation between that company and the officials of the department and they will put together an agreement. The agreement will typically say how much the company would put up financially in cash or kind. The value is normally measured against 25% of the value of the multinational corporations' business in South Africa or 4% of the total turnover from the South African operations.
A number of companies have such approved participation arrangements. They include companies like International Business Machines, IBM, Dell, Caterpillar, Microsoft, Hewlett Packard and others. I have been advised that in the work done to date, it has been quantified at about 3000 jobs in various sectors of the economy has been created through this programme. The programme, of course, seeks to advance the objectives of the National Development Plan in that it seeks to address the historic imbalances and the discrimination of the past and broaden economic access.