Minister of Communication and Digital Technologies Solly Malatsi will brief parliament tomorrow (27 May 2025) on a proposed policy change that would allow Broad-Based Black Economic Empowerment (B-BBEE) equity equivalence in the telecommunications sector, in line with how many international IT vendors fulfil their BEE obligations.
“The Portfolio Committee on Communications and Digital Technologies has invited Minister Solly Malatsi and the Department of Communications and Digital Technologies to appear before the committee and brief on the recently gazetted policy directions,” says committee chairperson Khusela Diko.
On Friday, Minister Solly Malatsi gazetted the department’s intention to issue a proposed Policy Direction in the Schedule to the Independent Communications Authority of South Africa (Icasa).
One of the intentions is to harmonise the requirements and provisions of the Act with other legislation that applies to the recognition of ownership in the ICT sector, including the Amended Broad-Based Black Economic Empowerment (B-BBEE) ICT Sector Code.
The gazetted document states that it is part of an initiative to expand access to broadband connectivity to poor South Africans and people living in remote parts of the country.
The policy direction is widely seen as having been designed to make it possible for Elon Musk’s Starlink to operate in South Africa without having to meet black ownership requirements under the existing B-BBEE legislation, and comes just days after President Cyril Ramaphosa’s meeting with US President Donald Trump.
However, Malatsi has previously commented on the issue, saying telecommunications operators should be able to meet B-BBEE obligations through equity equivalence investments in the same way that many global IT companies do.
The new directive states that policy clarity on the recognition of equity equivalent investment programmes has long been sought by multinational operators in the ICT industry, to attract increased investment in ICT and accelerate universal Internet access
The gazette document draws on the benefits that accrue from improved connectivity, quoting World Bank research that demonstrates an increase of 1,2% in GDP for every 10% increase in broadband penetration.
“The focus of this policy direction is on lowering regulatory hurdles to investment in reliable broadband and ensuring access to the Internet,” it states. “This is in line with the B-BBEE Codes of Good Practice which recognise that the global nature of multinational corporations’ operations may constrain their ability to comply with equity ownership requirements.
“Equity equivalent investment programmes, recognised in the Amended Broad-Based Black Economic Empowerment (B-BBEE) ICT Sector Code published in Government Notice No. 1387, Government Gazette No. 40407 of 07 November 2016 (ICT Sector Code) and other sector codes, provide an avenue for factoring in alternative ways for multinational companies to make an impact on South Africa’s socio-economic development.”
Currently, the Electronic Communications Act requires individual licences to include the percentage of equity ownership to be held by persons from historically disadvantaged groups, which must not be less than 30%.
However, the ICASA Act allows the authority may make regulations on empowerment requirements to promote B-BBEE.
The department is urging Icasa to urgently consider aligning the regulations with the Amended Broad-Based Black Economic Empowerment (B-BBEE) ICT Sector Code, to allow for the application of equity equivalence.
Interested parties are invited to provide written comments within 30 working days of the publication of the policy directive.