Malatsi Defends ICT Policy Direction, Affirms No Special Treatment for Firms

Addressing the Portfolio Committee on Communications and Digital Technologies, Minister Malatsi rejected any suggestion that the directive was tailored to benefit any multinational corporation.

The Department of Communications and Digital Technologies (DCDT) has moved to clarify the intent behind the newly proposed policy direction regarding Equity Equivalent Investment Programmes (EEIPs) in South Africa’s Information and Communication Technologies (ICT) sector, following public speculation that the directive may benefit a specific company or individual—namely Starlink and its founder Elon Musk.

On 23 May 2025, Minister Solly Malatsi published the draft policy direction in the Government Gazette, in accordance with Section 3 of the Electronic Communications Act (ECA), Act 36 of 2005, which empowers the Minister to guide the Independent Communications Authority of South Africa (ICASA) on key regulatory matters. The direction focuses on advancing Broad-Based Black Economic Empowerment (B-BBEE) in the ICT sector by incorporating EEIPs into licensing frameworks.

Dispelling Fears of Preferential Treatment

The policy’s timing—coinciding with President Cyril Ramaphosa’s diplomatic mission to the United States, where he met with President Donald Trump and included Elon Musk in his delegation—raised concerns about possible preferential treatment for Starlink’s entry into South Africa.

Addressing the Portfolio Committee on Communications and Digital Technologies, Minister Malatsi rejected any suggestion that the directive was tailored to benefit any multinational corporation.

“We are not attempting to open a special dispensation for Starlink or any other company or individual. There is no conspiracy on our part in relation to the policy direction,” Malatsi stated. “We have followed the law and public consultation procedures to the letter.”

Clarifying the Purpose of the Policy Direction

The central aim of the proposed policy is to introduce policy certainty for local and international investors in the ICT sector—especially regarding licensing of broadcasters, mobile and fixed network operators, and internet service providers.

The current ECA framework mandates that license applicants must have at least 30% ownership by historically disadvantaged individuals (HDIs). However, the ICT Sector Code under the B-BBEE Act recognizes EEIPs as an alternative for multinational companies that cannot meet this requirement through direct equity due to global ownership policies.

Malatsi noted that although EEIPs have been in place since 2016, approved under the Department of Trade, Industry and Competition (dtic), they are not fully reflected in ICASA’s Ownership Regulations, resulting in regulatory uncertainty.

“Our goal is alignment. We must ensure that ICASA’s regulatory framework is consistent with the provisions of the BBBEE Act and the ICT Sector Code, including the recognition of EEIPs as legitimate transformation contributions,” the Minister said.

Understanding EEIPs in the ICT Sector

EEIPs are empowerment initiatives that allow multinationals to contribute to South Africa’s transformation goals without relinquishing direct equity. These contributions may include:

• Investments in local suppliers and SMMEs

• Enterprise and skills development

• Job creation initiatives

• Support for ICT infrastructure

• Funding for digital inclusion and innovation

Minister Malatsi stressed that the adoption of EEIPs is not about circumventing transformation but broadening the avenues through which it can be achieved.

“Transformation is sacrosanct in South Africa. EEIPs are not a dilution but an expansion of how transformation can be pursued—especially in sectors where foreign investment is vital but traditional equity transfer is impractical,” he said.

Consultation and Legal Compliance

The Minister explained that the process to develop the policy began in September 2024, and ICASA was formally notified of the department’s intentions on 4 October 2024. A public comment notice was released the same day.

ICASA was granted the opportunity to engage with the draft policy direction, and all stakeholders now have 30 days from the publication date to submit their inputs.

“We are now in the public comment stage, and it is vital that all views are considered before finalizing the policy direction,” Malatsi said. “ICASA’s role is not to block the Minister but to provide input as per the legislative framework.”

He further reiterated that once public inputs are considered, the final policy direction will be issued to ICASA in compliance with national laws.

Broader Implications for the ICT Sector

The proposed policy direction is a strategic step to modernize South Africa’s ICT regulatory environment to accommodate a more diverse range of investment models. The move is also expected to attract multinational players, potentially expanding internet access, improving infrastructure, and stimulating job creation within the digital economy.

Critics, however, remain concerned about transparency and the need to balance foreign participation with local empowerment imperatives. The Minister’s emphasis on open consultation and legal compliance seeks to alleviate these concerns.

Looking Ahead

With South Africa’s digital transformation agenda gaining momentum, the finalization and implementation of the EEIP-inclusive policy direction could mark a turning point in how inclusive growth is achieved in the ICT sector.

The next few weeks will be critical as public comments pour in, and the department refines its policy to ensure it drives investment without compromising transformation.