Latest news with #EEIPs
IOL News
11-06-2025
- Business
- IOL News
The impact of Malatsi's EEIP on rural connectivity and economic growth
Communications and Digital Technologies Minister Solly Malatsi. The writer says his recent policy direction to recognise EEIPs in the ICT sector must be applauded. Image: X/IOLGraphics THERE is an old saying: Repeating the same actions and expecting different results is the definition of futility. For decades, South Africa under ANC rule has tried to marry economic growth with rigid, quota-based transformation policies. The results of which are, unfortunately, low growth, soaring unemployment, deepening poverty, and worsening inequality. The Western Cape has taken a different path while in support of transformation, one based on merit, capability, and performance. Transformation here is not a tick-box exercise but a tangible outcome of appointing people who are fit for purpose and investing in what works. The results speak volumes: efficient service delivery and a resilient economy that consistently outperforms other provinces. It is within this context that Minister Solly Malatsi's recent policy direction to recognise Equity Equivalent Investment Programmes (EEIPs) in the ICT sector must be applauded. This move represents a significant shift away from box-ticking compliance toward meaningful inclusion by facilitating investment in digital infrastructure rather than enforcing ownership quotas. 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. 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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. Next Stay Close ✕ Crucially, connectivity is no longer a luxury — it is a prerequisite for economic participation. High-speed internet, particularly through satellite services such as Starlink and other alternative providers, can bring previously disconnected rural areas into the digital economy. Such access opens up transformative opportunities in education, entrepreneurship, employment, and service delivery. The Business Process Outsourcing (BPO) sector, particularly call centres, offers a clear example of what is possible with the right infrastructure. According to a 2021 Wesgro report, 74% of Africa's BPO economic activity occurs in Cape Town, which is leading the charge. The city's appeal lies in its diverse economy, deep talent pool, and robust infrastructure. It offers 65% to 70% lower operational costs than tier-2 cities in the UK, making it a magnet for international investment. There is compelling evidence that improved internet access leads to higher productivity, increased wages, and better employment prospects. Studies show that in developing countries, firms with reliable internet connections are more likely to increase sales and export volumes. A recent study in Colombia found that rural firms located in areas where high-speed internet infrastructure was rolled out experienced a significant rise in exports. In South Africa, towns such as Beaufort West exemplify the unrealised potential of rural communities. With youth unemployment sitting at about 55% in the Central Karoo and with infrastructure like the unused Land Bank building readily available, the town could be a natural candidate for BPO investment. However, the current lack of reliable, high-speed internet is a major barrier. It is not for a lack of willingness or resources — it is the digital infrastructure that is holding these towns back. By contrast, Cape Town's digital ecosystem enables businesses and individuals to thrive. Faster speeds, higher bandwidth, and stable connectivity are not just conveniences — they are economic enablers. For towns like Beaufort West and broader regions such as the Karoo, challenges like poor soil conditions limit large-scale crop production. Improved digital infrastructure would empower farmers with tools such as remote livestock monitoring, GPS tracking, health diagnostics, and access to real-time market prices, enabling better herd management, reduced losses, and improved productivity. Connectivity also plays a vital role in rural safety, offering digital surveillance systems and rapid communication channels to help combat livestock theft and other forms of farm-related crime. Bridging the digital divide is therefore not just about economic growth; it is about long-term sustainability for rural livelihoods. This is where Minister Malatsi's initiative becomes pivotal. EEIPs that allow international technology investors and innovators to support South African connectivity goals without navigating outdated B-BBEE ownership constraints. This is exactly the kind of progressive thinking the country needs. The broader economic imperative cannot be ignored. The Government of National Unity (GNU) has made a clear commitment to growing the economy and creating jobs. Outdated legislation and failing infrastructure must not be allowed to stand in the way. The country's economic future depends on urgent reform and enabling environments. Recent data from Statistician-General Risenga Maluleke provides a sobering picture. Household reliance on social grants rose from 21.3% in 2009 to 28.8% in 2020, before marginally decreasing to 23.8% in 2024. In provinces such as the Eastern Cape (38.9%), Northern Cape (34.4%), and Limpopo (33.8%), grants remain the primary source of income. This entrenched dependence is a reflection of how deeply economic exclusion runs, particularly in rural South Africa. In contrast, the Western Cape recorded the lowest grant reliance at 14%, with 68.2% of households earning their income through employment. This is not a coincidence — it is the result of policies that prioritise economic growth and individual empowerment over bureaucratic box-ticking.
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
