By Johnathan Paoli
Communications and Digital Technologies Minister Solly Malatsi has defended his policy directive aimed at adjusting company transformation targets and black economic empowerment (BEE) requirements.
He said that this adjustment He said this was a further step in a long-term process to make the ICT industry more accessible to new businesses, and not as a result of the recent diplomatic pressure the country has received regarding its transformation laws.
Malatsi is facing criticism over this decision, which some perceive as facilitating Starlink’s operations in South Africa without requiring compliance with BEE equity provisions.
He appeared before Parliament’s Portfolio Committee on Communications and Digital Technologies on Tuesday to brief MPs on the recently gazetted draft policy directive regarding the Equity Equivalent Investment Programme (EEIP) and licensing procedures in the Information and Communication Technology (ICT) sector.
“The intention is not to dilute empowerment, but to expand it in a more flexible and legally grounded manner. This is about aligning our licensing practices with national empowerment legislation and ensuring regulatory consistency,” Malatsi told committee members.
The highly anticipated briefing sought to clarify growing public and political concerns surrounding the directive’s intent, legal basis, and implications for transformation in the sector, especially amid controversy involving foreign firms like Elon Musk’s Starlink.
Malatsi opened the session by firmly rejecting speculation that the policy directive constitutes a special exemption for any particular multinational, reiterating that the draft does not introduce unique dispensation or bypass ownership laws.
Instead, he said, the directive aims to bring the licensing regime in line with the Broad-Based Black Economic Empowerment (B-BBEE) Act and the ICT Sector Codes.
It provides clarity on how foreign-owned companies that struggle to meet the 30% equity requirement can still contribute meaningfully to transformation through EEIPs—programmes that enable alternative investments in areas such as skills development and enterprise support.
The directive’s development dates back to September 2023, with the department formally notifying the Independent Communications Authority of South Africa (ICASA) of its intentions by October that year.
As required under Section 3 of the Electronic Communications Act (ECA), ICASA was given the opportunity to engage with the draft, and the policy was subsequently gazetted for public comment—a process still underway.
Malatsi further referenced a 2014 amendment to the ECA that expanded the legal definition of empowerment to incorporate the broader B-BBEE framework.
This shift paved the way for EEIPs to be used in place of direct ownership in cases where traditional models were impractical, especially for multinationals with global shareholding constraints.
He emphasised that EEIPs are not a new invention.
They were formally recognised by the Department of Trade, Industry and Competition (DTIC) in 2016, and have been applied in several other sectors.
“We are merely ensuring that these mechanisms are consistently applied in the ICT space as well, including licensing,” he said.
A parallel discussion focused on the department’s approach to issuing new individual Electronic Communications Network Services (IECNS) licences.
Chief Director Alf Wiltz outlined how the department is responding to calls to open licensing to new entrants, following recommendations by the Competition Commission that pointed out inadequate competition and high data costs.
Wiltz explained that while nearly 490 IECNS licences exist—due largely to a landmark legal ruling in the 2000s, the actual ability to use or trade them remains concentrated among a few operators.
Many potential entrants are locked out due to the absence of a ministerial policy direction under Section 5(6) of the ECA, which prohibits ICASA from accepting new applications without it.
As a result, the department has issued a separate draft directive calling for ICASA to conduct a formal inquiry into the market’s readiness for new entrants.
The outcome of that inquiry will determine whether new licences should be issued to improve competition, increase access, and reduce costs.
Committee Chairperson Khusela Diko questioned whether the two directives—on EEIP and licensing—were sequential steps toward liberalising the market in favour of companies like Starlink.
Malatsi cautioned against such assumptions, noting that the consultation process must be completed before any policy conclusions are drawn. “We must be guided by evidence, not perception,” he said.
The EEIP directive has sparked controversy across the political landscape.
Critics, including Minister in the Presidency Khumbudzo Ntshavheni and Committee Chair Diko, have questioned its legality and accused Malatsi of attempting to override Parliament.
Ntshavheni argued that the ECA governs the telecoms sector independently from the broader ICT landscape, and warned that EEIPs have no established place in telecommunications licensing.
Opposition parties, including the Economic Freedom Fighters, uMkhonto weSizwe and the African Transformation Movement, have called the directive a betrayal of transformation goals, while trade unions such as the South African Federation of Trade Unions have accused the minister of capitulating to foreign corporate interests.
Accusations of “executive overreach” have surfaced, with legal scholars noting that only Parliament—not a ministerial directive—can amend the core requirements of the ECA.
Malatsi rejected these claims, saying the directive was lawfully issued in line with the ECA and B-BBEE Act.
“We are not bypassing any laws. We are working within existing legal frameworks to promote investment and empowerment,” he insisted.
The department has opened a 30-day public consultation window for stakeholders to comment on both draft directives.
After this period, all submissions will be reviewed and used to inform the final policy position, which will be communicated to ICASA for potential implementation.
Malatsi acknowledged that broader legislative reforms may be necessary in the future and did not rule out amendments to the ECA.
However, he argued that the policy directive was the most practical and timely tool available to resolve current regulatory inconsistencies.
“Our goal is a more inclusive, competitive, and digitally empowered South Africa. Whether through equity or equivalence, transformation must remain non-negotiable,” the minister said.
As Parliament prepares for further debate and public pressure continues to mount, the fate of the directives could reshape South Africa’s telecoms policy—and its broader digital future—for years to come.
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