Latest news with #EEIPs
IOL News
28-05-2025
- Business
- IOL News
B-BBEE ICT Sector Council raises alarm over new BEE policy proposals
Concerns mount as B-BBEE policy changes threaten ICT sector transformation Image: Supplied The B-BBEE ICT Sector Council has voiced strong concerns regarding recent B-BBEE government policy proposals that could undermine South Africa's ongoing efforts toward inclusive economic transformation within the ICT sector. In a statement issued Tuesday evening, the council welcomed the Minister of Communications and Digital Technologies' announcement to open new individual electronic communications network service (IECNS) licenses but raised serious concerns. The recent gazetting of a new B-BBEE policy, which could potentially facilitate the entry of companies like Starlink, comes after a high-profile meeting between President Cyril Ramaphosa and US President Donald Trump, whose delegation included Elon Musk, the owner of Starlink. 'We see this as an opportunity to expand market access and promote increased participation of small, medium, and micro enterprises (SMMEs), provided it is implemented within a robust transformation framework,' the Council stated. However, their optimism was sharply tempered by apprehensions about accompanying policy proposals to allow Equity Equivalent Investment Programmes (EEIPs) to replace the legislated 30% Historically Disadvantaged Individual (HDI) ownership requirement set out in the Electronic Communications Act (ECA). The Council warned that 'introducing EEIPs as an alternative to the 30% HDI ownership requirement could reverse the fragile gains made in sector transformation,' risking a resurgence of exclusionary practices. In their statement, they stated that the ownership requirement under the ECA serves more than just compliance; it is a statutory tool designed to promote direct ownership and control by historically disadvantaged South Africans, reflect the country's demographic priorities, and support inclusive economic growth. 'This mechanism ensures that licensees contribute to infrastructure roll-out, universal access, and broad-based redress - not charity or peripheral impact,' the Council explained. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Alarmingly, the council said that some actors opposing these measures have historically resisted BEE and other transformation efforts, raising questions about their motivations. 'These developments threaten to sideline South Africa's legal framework and long-standing transformation objectives,' the statement warned, adding that some local beneficiaries of B-BBEE are now advocating measures that could exclude the very communities they were meant to uplift. The Council rejected the current form of EEIPs, citing 'glaring gaps' in transparency and measurable impact. The organisation stated that adopting such programs could set a dangerous precedent, allowing dominant incumbents and multinational corporations to bypass local ownership requirements while reaping the benefits of operating in a strategic sector. Potential Risks and Broader Implications The institution highlighted several risks associated with these proposed changes arguing that, first and foremost among them - is the threat to local industry and jobs. 'An infrastructure-light, foreign-controlled model risks decimating local Internet Service Providers (ISPs), SMMEs, and Wireless Internet Service Providers (WISPs), especially in underserved rural areas,' the Statement cautioned. It argued that such a shift could undermine national broadband initiatives like SA Connect and lead to South Africa's digital payments flowing out of the country without contributing to local economic development. Moreover, the council warned that establishing these principles in the ICT sector could set a dangerous precedent for other strategic industries with B-BBEE ownership requirements. 'This could weaken empowerment models across various sectors, undermining meaningful economic participation by historically disadvantaged groups,' the statement cautioned. Calls for Transparency and Upholding Transformation Principles The ICT council demanded a comprehensive review of EEIPs, emphasising that their impact on sector transformation remains marginal and unaccountable. They called for mandatory, transparent public reporting on EEIP performance, including sector oversight and measurable Key Performance Indicators (KPIs), to prevent fiscal opacity and ensure tangible impact. Additionally, the council urged clarity on how new licensees will contribute to the Universal Service Fund and align with the mandate of the Universal Service and Access Agency of South Africa (USAASA). 'Any exemption from contributing to the fund risks creating unfair economic asymmetries and impeding efforts to bridge the digital divide,' the statement read. The Council appealed to the government to uphold the constitutional and developmental vision of economic justice. 'Transformation is a moral, constitutional, and legislative imperative. It cannot be sacrificed for expediency, foreign lobbying, or narrow commercial interests.' According to the institution, the B-BBEE ICT Sector Council intends to submit a formal response during the 30-day public consultation period, urging all stakeholders committed to genuine transformation to review and contribute to the dialogue. They argued that while ICASA is expected to consider the Minister's policy directions, these do not preclude comprehensive sector input. When contacted for comment, Ramasela Matlou, an ICASA spokesperson, stated that the regulator has noted the policy directive and is currently reviewing its contents. Matlou added that Starlink has not yet applied to enter the South African market. IOL Politics
IOL News
27-05-2025
- Business
- IOL News
Solly Malatsi gets grilled in parliament over 'Starlink gazette', defends ICT policy directive
Communications and Digital Technologies Minister Solly Malatsi defends ICT policy, denies special treatment for Starlink, and stresses the need to align sector regulations with transformation laws through equity equivalent investment options. Minister of Communications and Digital Technologies, Solly Malatsi, has defended his department's recently gazetted policy directive aimed at recognising Equity Equivalent Investment Programmes (EEIPs) in the ICT sector, insisting that it is rooted in legal compliance and transformation, not special treatment for any company. This comes after Committee Chairperson Khusela Diko stated that the gazetted policy directions appear to violate the Electronic Communications Act and seem to favour the low Earth orbit satellite provider, SpaceX. Speaking before Parliament's Portfolio Committee on Communications, Malatsi clarified that the directive is part of a broader and longstanding effort to align the ICT sector's licensing regulations with the Broad-Based Black Economic Empowerment (B-BBEE) framework. 'We are not attempting to open a special dispensation for Starlink or any other company or an individual,' Malatsi said. 'We are saying that the regulations in our sector must consistently make provision for the two choices that exist in any other sector, the 30% local ownership or the pathway of equity equivalence.'
The Citizen
27-05-2025
- Business
- The Citizen
Solly Malatsi's B-BBEE proposals are nothing new
The backlash against Malatsi's move says more about political point-scoring in the GNU than it does about the legitimacy of equity programmes. There is an interesting irony about the angry allegations that DA Communications Minister Solly Malatsi wants to bypass broad-based black economic empowerment (B-BBEE) rules to allow Elon Musk's Starlink to operate in SA. Malatsi's proposals are not only not new, they are an accepted black economic empowerment strategy which has the approval of the department of trade, industry and competition… and which has been applied to investments here by some of the world's biggest, US-headquartered companies, including Microsoft, IBM and Amazon. The equity equivalent investment programmes (EEIPs) cited by Malatsi have been in operation since the B-BBEE Act of 2003 came into force. The programmes allow companies to invest in skills development or black-owned small businesses, instead of having to sell shares… and earn B-BBEE points. ALSO READ: Transformation Fund offers second chance for inclusive reform That communications portfolio chair Khusela Diko seeming unaware of the policy implemented by her own ANC party is worrying – because it either means she is ignorant, or is trying to score political points against the DA in the government of national unity (GNU). In the broader picture, though, Malatsi's actions will be seen as more 'betrayal' by the ANC and others in the GNU who are as ignorant about EEIPs as is Diko. The DA is already seen as trying to undermine the ANC by fighting the Basic Education Laws Amendment Act and in pushing back vigorously against the expropriation without compensation policy. It hasn't helped that DA ministers like Siviwe Gwarube (basic education); Leon Schreiber (home affairs) and Dean Macpherson (public works) have been conveying the image of getting things done. EEIPs are in operation already, so why the big deal? The positive aspect about the concept is that it can bring genuine empowerment, rather than mere cadre enrichment. NOW READ: Transformation Fund offers second chance for inclusive reform
The Citizen
27-05-2025
- Business
- The Citizen
Starlink's proposed deal ‘wrong in principle and practice'
Critics question the legality of exempting Starlink from B-BBEE rules, citing unfair treatment of other foreign firms. If Elon Musk's Starlink satellite internet service is exempted from local rules on broad-based black economic empowerment (B-BBEE), it would be 'surrendering South Africa's sovereignty' to the American tycoon. This is the view of political economist Dale McKinle, who added: 'It's wrong in principle, it's wrong in practice. The reason is that it sets a precedent for bending the rules simply because someone is wealthy.' Starlink's proposed deal 'wrong in principle' He said the fact that it involved a high-profile individual like Musk, who has a close relationship with US President Donald Trump, was itself a problem. 'It smacks of bullying. It's basically bending over backwards because we've been threatened, because people involved have lots of political and economic power,' McKinley said. He said the move would 'please some racists and bullies', and open an opportunity for a rethink on the B-BBEE itself. ALSO READ: MK party threatens Malatsi with court action if Starlink gazette not scrapped McKinley said the proposed change to the B-BBEE approach 'would fundamentally change the B-BBEE situation'. He said the policy itself was not wrong per se, but there were some problems with its applications. He suggested rethinking B-BBEE so that it benefits ordinary people rather than the elite. The debate around Starlink's possible exemption from adhering to B-BBEE rules is set to intensify as Communications and Digital Technologies Minister Solly Malatsi was summoned by the portfolio committee on communications and digital technologies to appear before it today. Minister summoned by committee The committee believed Malatsi's approach was in contravention of the Electronic Communications Act, which required B-BBEE to be applied by licensees in the sector. Several organisations promised to challenge the plan to allow Starlink to operate outside the B-BBEE policy in court, based on contravention of the law, including constitutional provisions on equality. Starlink was envisaged to roll-out connectivity, particularly in rural areas of South Africa. ALSO READ: Malatsi's move 'a shameless sellout to American oligarchs Musk and Trump' Malatsi proposed alternative empowerment strategies for investments in the information and communication technology sector, including equity equivalent investment programmes (EEIPs) which could mean investment in local infrastructure or small black-owned businesses. Independent political analyst Sandile Swana said B-BBEE was a law in South Africa that could only be changed or abolished by parliament. 'You can say B-BBEE will end if you are confident that 51% of parliamentarians want it abolished,' said Swana. Law can only be changed by parliament 'Right now, the ANC is the only party that can end B-BBEE in South Africa. But if you are sure that the ANC is ready to end B-BBEE before 2029, that is fine; B-BBEE will then end.' Swana said at least 22 American companies, including Microsoft, Amazon and Ford – that had invested in South Africa for many years – complied with the country's B-BBEE laws without any qualms. He said those firms would be envious of Starlink being given preferential treatment by the government. ALSO READ: Chance for people to really benefit The telecommunications sector is bound by the Electronic Communications Act – under which the Independent Communications Authority of South Africa (Icasa) was established – which states there must be B-BBEE shareholding for any licence issued. 'So, if you are going to hold a licence in that space, you must have black shareholders, whether you are a broadcaster or a telecommunications company,' said Swana. 'Since Starlink fell under the Icasa ambit, it should make a deal with Icasa that conforms with the Act.' Sector bound by Electronic Communications Act However, specialist website TechFinancials reported last week that EEIPs have been activated in major investments in this country by US companies IBM, Microsoft and Amazon. The website said foreign companies often cannot transfer direct ownership, so the EEIPs would be approved by the department of trade, industry and competition to earn B-BBEE points. Firms earn full ownership points for approved initiatives. NOW READ: Malatsi summoned to Parliament to explain Starlink policy directive
Daily Maverick
26-05-2025
- Business
- Daily Maverick
Parliament summons Malatsi over controversial B-BBEE policy direction
Communications Minister Solly Malatsi has been called to appear before Parliament on Tuesday, 27 May, to explain a proposed policy direction that could significantly alter the way South Africa regulates empowerment in the ICT sector – and possibly open the door to long-blocked players such as Starlink. The summons follows a public backlash from parliamentary communications and digital technology committee chairperson Khusela Sangoni Diko, who questioned both the legality and motivation behind the minister's move, describing it on social media as a 'spectacular mess up of process and glaring invitation for litigation'. The policy On Friday, 23 May, Daily Maverick reported how Malatsi gazetted a Proposed Policy Direction to the Independent Communications Authority of South Africa (Icasa), instructing it to align its ownership regulations with the Amended B-BBEE ICT sector code. The key shift? Recognising Equity Equivalent Investment Programmes (EEIPs) as an alternative to the existing 30% equity ownership requirement for electronic communications licensees. Malatsi's statement stressed a need to 'unlock investment' and 'accelerate broadband access' by offering multinationals alternative ways to meet empowerment obligations, such as investing in local suppliers, skills development, infrastructure and small businesses. 'Transformation is non-negotiable,' Malatsi said. 'Even if companies are not rolling out large-scale infrastructure, they will be required to make commitments that are substantive and clearly aligned with South Africa's socioeconomic development goals.' Chairperson raises red flags Shortly after the policy was gazetted, Diko publicly criticised the move. In a tweet posted on X on 23 May, she questioned whether the policy was a deliberate attempt to favour Starlink, saying it could amount to, 'From what could be construed as unfair regulation to attempts to circumvent the law through policy directives not worth the paper they are written on'. A more detailed response, attributed to committee member Stan Itshegetseng and shared by Diko, argued that the minister's directive might be legally flawed. It pointed out that Section 9(2)(b) of the Electronic Communications Act (ECA) required a minimum of 30% ownership by historically disadvantaged individuals for applicants seeking individual licences. The statement asserts that EEIPs, while legitimate under the Broad-Based Black Economic Empowerment Act, cannot override the ECAs hard ownership threshold – a threshold, it emphasises, that is embedded in licensing law, not just empowerment scoring. 'The minister is effectively attempting to recast licensing law through policy directive', the statement read. 'That is not within his powers. Only Parliament can amend the ECA. Only courts can resolve interpretive contradictions between the ECA and B-BBEE frameworks.' What does this mean? What's at stake? A fundamental question about whether policy can reinterpret law. Is this about Starlink? Malatsi hasn't named it, but the committee has. Parliamentary scrutiny begins The portfolio committee has now formally invited Malatsi and the Department of Communications and Digital Technologies to appear before it for a briefing in Parliament scheduled for Tuesday, 27 May, at 9am. According to the committee, the policy direction 'appears to be in contravention of the Electronic Communications Act and in favour of low-Earth orbit satellite provider SpaceX.' Diko declined to speak further on the matter, saying she would wait for 'the committee's collective wisdom' to be expressed.
