Latest news with #B-BBEE
Zawya
2 days ago
- Business
- Zawya
Starlink's bid for South Africa entry: Public still has time to weigh in on EEIP policy
In a previous article published in March, I examined Starlink's plans to enter the South African market and its dispute with the Independent Communications Authority of South Africa (Icasa), the country's telecoms regulator. The dispute relates to licensing requirements under the Electronic Communications Act 36 of 2005, which mandates that 30% of equity in licensed entities be held by historically disadvantaged South Africans, and is part of the country's Broad-Based Black Economic Empowerment (B-BBEE) policy. Image source: Freepik Starlink argued that its global policy does not allow for dilution of ownership, and that the 30% local shareholding requirement hinders foreign investment in South Africa. As an alternative, Starlink has proposed equity equivalent investment programmes (EEIPs), which have received support from the Minister of Communications and Digital Technologies, but not yet from Icasa. Public hearings This situation reflects broader tensions between promoting foreign investment and technological advancement, especially for rural connectivity, and upholding local transformation policies. Starlink's potential entry could also disrupt local telecommunications competition. In February 2025, Icasa held public hearings on a proposed new satellite licensing framework and received over 50 written submissions. SpaceX, Starlink's parent company, submitted written input but withdrew from the oral hearings. Icasa is reviewing all submissions and has indicated a willingness to find balanced regulatory solutions that support innovation and inclusivity. Although Starlink withdrew from making oral submissions at Icasa's public hearings in early February, its arguments appear to have been both heard and seriously considered. As mentioned in the previous article, the written representations by Starlink included support for EEIPs as an alternative to the 30% local shareholding requirement, stating that it will attract foreign investment in South Africa. A mere three months after holding the public hearings, the Minister has issued a new proposed policy direction offering alternatives to the 30% local shareholding requirement. The Broad-Based Black Economic Empowerment Act 53 of 2003 and ICT Sector Codes acknowledge the fact that some multinational companies have policies and practices which prevent them from having previously disadvantaged South African shareholders. Even though these multinationals cannot offer shareholding to qualifying South Africans, the Codes make provision for contributions to be recognised through EEIPs instead of a direct sale of an entity's shares. EEIPs EEIPs refer to public or private initiatives established to meet the ownership requirements of the B-BBEE framework. These programmes may also focus on investment or other initiatives that contribute to socioeconomic development within the South African economy. This can take the form of investing in infrastructure in rural areas, enterprise and skills development, job creation, as well as research and innovation. To be eligible for ownership points on the B-BBEE scorecard, such programmes must receive approval from the Minister of Trade and Industry. Once approved, the EEIPs and the associated ownership points cannot be applied to any other element of the multinational's B-BBEE scorecard. The value of the EEIP contributions can be measured against 25% of the value of the multinational's South African operations or may be measured against 4% of the total revenue from its South African operations annually throughout continued measurement. This new policy sees a shift in Icasa's stance regarding foreign investment. The Minister stated that this new policy was essential to attract investment, particularly in strategic infrastructure, and to drive innovation in the communications industry. It also aims to enhance competition in the information and communications technology sector and to support, enable, and align efforts to achieve the goals set out in the law. Despite the policy, it is clear that the commitment to transformation has remained the goal. The policy is still open for public comment until 7 July 2025. Only time will tell whether these EEIPs deliver meaningful returns to the B-BBEE beneficiaries, much like the 30% ownership requirement aimed to do, while unlocking greater foreign investment in South Africa's telecommunications sector. For now, the message from the government seems promising, but will the signal be clear?
The Citizen
2 days ago
- Business
- The Citizen
Concerns over Mantashe's changes to draft mineral resources bill
Mantashe's changes to mining legislation have provoked backlash for favouring the industry over public interest. Minerals and Petroleum Resources Minister Gwede Mantashe was lashed for omitting a requirement for Black Economic Empowerment (B-BBEE) participation in applications for prospecting rights. Mantashe recently gazetted two corrections to the Draft Mineral Resources Development Bill and also nullified a provision for ministerial approval for change of control in listed companies that own mining rights. Mining expert David van Wyk asked why the minister backed down. Environmental concerns 'The prospecting companies make huge profits after prospecting reports are out. They sell the prospecting reports to the highest bidder. 'We have a serious problem with the change of control in listed companies. It is what ultimately allows mining companies to walk away from their environmental responsibilities and their responsibility to close and rehabilitate mines,' said Van Wyk. 'This is why we have more than 6 000 abandoned mines. When control of companies changes and the minister, as the custodian of the minerals which, according to the Act, belongs to the public, is not informed of these changes, he is unable to assign responsibility to the owners as he will not know who they are.' ALSO READ: 'Is it greed or jealousy?': Ramaphosa fires back at critics of BEE, Transformation Fund Call for state-led mining and revenue transparency The solution to the problems of environmental and social responsibility, as well as mine closure and rehabilitation, was to establish public ownership not just of the minerals in the ground, but also of the mining process and the extracted minerals, with the state as the custodian and the revenue accruing in a sovereign fund, Van Wyk said. South Africa does have a stateowned mining company and a sovereign fund, but the share of that company in the overall mining sector is minimal. There was no account of how much money has accrued in the sovereign fund since its inception, Van Wyk said. Christopher Rutledge, director at the Mining Affected Communities in Action, said the organisation was concerned. 'Pressure of elite interests' 'Following a mere signal of dissatisfaction from the mining sector, Mantashe swiftly amended the draft of the Bill, specifically the removal of the requirement for B-BBEE participation in prospecting rights and the omission of provisions for ministerial oversight of changes in control of listed companies holding rights. 'As we have previously warned, the main purpose of the Amendment Bill represents a further retreat from the constitutional mandate of transformation, accountability and justice for mining-affected communities. 'Rather than correcting the draft Bill, the minister has capitulated even further to the pressure of elite interests, in particular the Minerals Council South Africa, confirming the extent to which the state has aligned itself with industry over people.' Rutledge said the removal of BEE from the prospecting regime was not a technical correction, but a political decision to sell-out transformation. ALSO READ: Starlink proposal: Mashatile says Cabinet holds final say on policy changes Prospecting was the gateway to mining and excluding it from transformation requirements ensures the ownership and control of mineral resources remains concentrated in the hands of historical beneficiaries of apartheid-era privilege, he said. 'This opens the door to unchecked mergers, takeovers and asset stripping with no regard for affected communities, workers, or environmental responsibilities. We reject the illusion that deregulation is a form of reform,' Rutledge said. Industry engagements Union federation Cosatu spokesperson Mathews Parks said it was critical that legislation is in sync with B-BBEE to avoid contradictions. 'Cosatu will engage with the minister to get a better understanding of the objectives of the amendments.' Minerals Council South Africa Allan Seccombe said the organisation would continue to review the Bill and submit its perspectives by 13 August. 'The Bill in its current form does not encourage or sustain the growth and investment that the mining industry needs.' NOW READ: Cosatu says debate on B-BBEE is needed for beneciaries' benefit
The Citizen
2 days ago
- Business
- The Citizen
Is the ANC quietly rewriting empowerment
Gwede Mantashe's removal of B-BBEE rules for prospecting rights has ignited criticism from labour and activists, raising fears of a shift in policy. Is the ANC-led government of national unity (GNU) about to sell out on the principle of broad-based black economic empowerment (B-BBEE), the policy which has formed the bedrock of ANC policy and which has been in the crosshairs of its critics recently? That's the question which arises from the decision of Minerals and Petroleum Resources Minister Gwede Mantashe to remove the requirement for B-BBEE participation in prospecting rights. According to some NGOs involved in the mining sector, Mantashe caved in to pressure from the mining lobby, not only on the prospecting licence rules, but also on the requirement that the minister must approve any change in control of listed companies that own mining rights. The latter means that the government would be unable to track owners and assign responsibility to them for cleaning up mining sites once an ore body has reached the end of its profitable life. That, say Mantashe's accusers, means potential environmental damage on a huge scale. ALSO READ: 'Is it greed or jealousy?': Ramaphosa fires back at critics of BEE, Transformation Fund But it is the amendment to empowerment rules which has angered groups like organised labour, because there seems to be no logical reason for the deviation. The latest development comes after Communications and Digital Technologies Minister Solly Malatsi was pilloried for allegedly trying to soften empowerment law to allow Elon Musk's Starlink to operate in South Africa. That this was an incorrect reading of both the law and what Malatsi said made no difference to his enemies, who claimed the DA minister was 'selling out' B-BBEE. There is also some concern about whether the ANC is feeling the pressure of people like the right-wing lobby and its powerful friend, US President Donald Trump, who view empowerment laws as apartheid in reverse. It seems unlikely the ANC would roll back these laws because it would be punished at the ballot box. Which leaves another question: What is Mantashe up to? NOW READ: Cosatu says debate on B-BBEE is needed for beneciaries' benefit
Eyewitness News
6 days ago
- Business
- Eyewitness News
Systemic govt failures, not BEE to blame rising unemployment in SA, says economist
JOHANNESBURG - The debate over the effects of broad-based black economic empowerment (B-BBEE) continues, as some push back against claims that affirmative action is to blame for rising unemployment. This follows a report by the Free Market Foundation and trade union Solidarity, which links the country's high unemployment rate to B-BBEE policies. However, numbers from Statistics South Africa (Stats SA) tell a different story, showing that employment has grown from 8.9 million in 1994 to 16.7 million in the first quarter of 2025. Of these, more than 12 million jobs are held by black South Africans. According to Stats SA, the number of employed black people has increased from 5 million in 1994 to 12 million in the first quarter of 2025. While more black people are employed now than three decades ago, they still experience the highest rate of unemployment compared to other racial groups. Solidarity argued that B-BBEE had contributed to rising unemployment among black South Africans. However, political economist Dale McKinley disputed the claim that B-BBEE was responsible, instead attributing the issue to systemic government failures. "What I don't agree with is that you can blame BEE [black economic empowerment] for the lack of growth in the economy as a whole. Those are structural problems in our economy that go way beyond a particular BEE policy, that go through apartheid legacy and racial and class divisions that are very deep." In his presidential newsletter, President Cyril Ramaphosa also refuted claims that B-BBEE had failed to address unemployment.
IOL News
13-06-2025
- Business
- IOL News
Cosatu defends B-BBEE policy amid criticism from Solidarity and FMF
The Free Market Foundation and Solidarity held a media briefing on Thursday to discuss the impact of Black Economic Empowerment legislation on the economy. Image: Supplied Banele Ginidza The battle for the scrapping of "race laws" in South Africa went a notch up on Thursday as the Congress of South African Trade Unions (COSATU) shot down a call to review and drop South Africa's Broad-Based Black Economic Empowerment (B-BBEE) policy. This comes as trade union Solidarity and the Free Market Foundation (FMF) on Thursday released a report claiming that B-BBEE has caused serious damage to the country's economy and to its population while only enriching a small, politically-connected elite. The report draws on data from the B-BBEE Commission, Stats SA, the JSE, and international comparisons to assess the real costs of compliance across the key BEE scorecard elements: ownership, skills development, enterprise and supplier development, management control, and socio-economic development. According to the report, the annual cost of BEE compliance is between R145 billion and R290bn per year. It claimed that this has resulted in an annual reduction of 1.5% to 3% in economic growth, and to an annual loss of between 96 000 and 192 000 jobs. 'Our findings show that BEE, as currently designed, is enriching a small elite while throttling economic dynamism and deepening unemployment,' said Dr Morné Malan, FMF senior associate and co-author of the report, speaking at the joint press conference. The study compares South Africa's model with global 'affirmative action' policies in Malaysia, India, Brazil, the US, and Namibia, showing that South Africa's version is the most intrusive and economically damaging. At the media briefing, the organisations claimed that B-BBEE benefits largely captured by politically-connected elites as South Africa now ranks 139th in GDP per capita, down from 87th in 1994. Executives of both organisations said the people most affected by the current economic programme are people that work poor people and those that are beneficiaries are the elite. "That is why we will engage with Cosatu trade unions Numsa and others to find alternatives to the current racial legislation," said Theuns du Buisson, economic researcher at the Solidarity Research Institute, and co-author of the report. "In the second place we will continue to litigate and in the third place we will also put pressure on SA via the international world and continue to put pressure on South Africa with the outside world especially the G20 that comes." However, Cosatu's Parliamentary spokesperson Matthew Parks said the report provided no breakdown backed up by actual research as to any financial burden to the state nor how B-BBEE has been an obstacle to growing the economy and reducing unemployment. Parks said the report strangely cited statistics related to real and potential growth overall, but no evidence of the relationship between those and B-BBEE. He said it may as well have blamed constitutional democracy for South Africa's economic challenges. "No reference is made to the need to overcome our still prevalent racial divides as evidenced by countless employment equity studies confirming that most senior positions in the private sector are held by White males or that economic ownership, including shares on the JSE remain largely White-held," Parks said. Johann Rossouw, an economist at Altitude Wealth, said a more sensible empowerment model as an alternative to B-BBEE policies was Black Economic Skills Transfer (BEST), which would help with job creation and carry the economy into the future. "At the moment all the arguments are about how many ways to cut the existing pie instead of growing the pie that we have for the future. Black empowerment is not a policy of the government of national unity," Rossouw said, commending that the study was evidence based and drew comparison with other countries. "It is important that the GNU makes its own policies that will benefit the average poor." However, independent economist Duma Gqubule said the study and the report was fake news on steroids, which lacked the fundamental understanding of the objectives of transformation. Gqubule said the report lacked empirical evidence and was premised on companies counting upskilling workers for an example as a transformation contribution when both the worker and the company benefited from the exercise. "I would call on black business to come up with a coherent response to this. It is a dangerous agenda. We need another citizen dialogue on black empowerment for the new circumstances as the situation in the 1990s when the policies were crafted were critical," Gqubule said. BUSINESS REPORT
