Minister Solly Malatsi’s Policy Direction on Broad-Based Black Economic Empowerment (B-BBEE) for the ICT industry has met resistance from the Independent Communications Authority of South Africa (ICASA). In line with the Government of National Unity’s mission to maximise prospects of attracting investment through regulatory reforms, the Minister of Communications and Digital Technologies, Solly Malatsi, last year gazetted the policy direction on the role of equity equivalent investment programmes (EEIPs) in the ICT sector as a mechanism to accelerate broadband access.
The policy direction seeks to provide the much-needed certainty to attract investment into the Information and Communication Technologies (ICT) sector, specifically with regard to licensing for broadcasters, internet service providers, mobile networks, and fixed and mobile networks.
Currently, the rules around who can acquire a licence to provide electronic communications services or to operate an electronic communications network require a minimum of 30% shareholding to be in the hands of historically disadvantaged individuals. These regulations do not currently allow companies that can contribute to South Africa’s transformation goals in ways other than traditional ownership to qualify for individual licences under the Electronic Communications Act (ECA), including large international companies that do not usually sell shares to local partners.
EEIPs, provided for under the Broad-Based Black Economic Empowerment Act (Act 53 of 2003) and the ICT Sector Code, allow qualifying multinationals to meet empowerment obligations through alternatives to 30% ownership — such as investing in local suppliers, enterprise and skills development, job creation, infrastructure support, research and innovation, digital inclusion initiatives, and funding for SMMEs. Despite the legal standing of the ICT Sector Code under the BBBEE Act, ICASA’s Ownership Regulations do not fully reflect its provisions, particularly regarding deemed ownership and EEIPs.
The Independent Communications Authority of South Africa (ICASA) reiterated its commitment to advancing transformation, empowerment and economic inclusion within the telecommunications sector and all other sectors it regulates. In considering the policy direction, ICASA said that while the Amended ICT Sector Code must be applied in licensing qualification criteria, full alignment with all provisions of the Code, including equity equivalent investment programmes, would require a legislative amendment to the current ECA. The Authority said in a recent statement that it will continue to engage with the Ministry within the confines of its mandate.
Minister Malatsi’s policy direction would have opened the door for many other international companies to make their services available to South Africans. The matter is now back in the Department of Communications and Digital Technologies’ court to prepare the necessary amendments to the Electronic Communications Act for tabling in Parliament. That is likely to be a lengthy process.
