RECOGNISING ALL FORMS OF TRANSFORMATION TO UNLOCK INVESTMENT AND OPPORTUNITY
- BEE NEWS
- 5 days ago
- 4 min read
Sinazo Konongo | 26 June 2025
Solly Malatsi wants South Africa to send a clear message to the world that the country is open for investment, serious about transformation, and committed to connecting more people to opportunity.
If we want to connect more South Africans to opportunities, jobs, education, health, and business, we need serious investment in digital infrastructure. To get that investment, we must create a regulatory environment that is not only fair and consistent but also aligned with all national laws on transformation.
This is the purpose of the draft policy direction I issued recently. It aims to encourage the Independent Communications Authority of South Africa (ICASA) to ensure that all legitimate forms of transformation, as recognised in national legislation, are fully taken into account when it comes to licensing in the ICT sector.
It’s a straightforward step to fix a regulatory misalignment that’s been holding us back for far too long.
The policy direction is not a special exemption for anyone. It is about recognising the full scope of empowerment options set out in the ICT Sector Code, which was issued under the Broad-Based Black Economic Empowerment (B-BBEE) Act.
That law makes provision not only for ownership but also for a range of other transformation elements, from skills development and enterprise support to socio-economic contributions and infrastructure investment.
Yet despite this legal framework, ICASA’s current regulations focus narrowly on a single metric, which is 30% ownership by historically disadvantaged persons.
This misalignment is not just a legal technicality. It’s a real barrier to investment and, ultimately, to the goal of giving every South African a fair shot at digital inclusion.
While ownership is important, it is not the only valid or impactful route to transformation. By ignoring other contributions, such as those allowed under Equity Equivalent Investment Programmes (EEIPs), we are shutting the door on billions of rands in potential investment as well as the immense benefits these investments can create for citizens.
EEIPs have been part of South Africa’s empowerment toolkit since 2016. They allow 100% foreign-owned multinationals to meet transformation obligations without selling equity.
This is often not feasible due to global shareholder structures. Instead, companies invest directly in initiatives that benefit black South Africans. These may include funding for digital skills training, infrastructure projects in under-served areas, or the development of black-owned SMMEs.
These are not theoretical ideas. EEIPs have already delivered real results. For example, IBM committed R700 million over 10 years to ICT training and supplier development.
Microsoft’s APP Factory and enterprise development programmes have supported black-owned businesses across the country. Amazon launched a R365 million initiative focused on building 100% black-owned tech SMMEs. These are transformative contributions, and they are compliant with the law.
There is no reason why the ICT sector should be treated differently.
My responsibility, as Minister, is to ensure that the law is applied consistently and that ICASA’s regulations do not inadvertently create unnecessary barriers to entry or investment. That is precisely what the policy direction seeks to achieve.
In fact, this issue goes back to 2014, when Parliament amended the Electronic Communications Act (ECA) to shift the focus from individual ownership by historically disadvantaged persons to include the broader framework of B-BBEE. The amendment was clear that ICASA was empowered to develop regulations that reflect broad-based empowerment, not just equity stakes.
Importantly, the amended law included the phrase “or such other conditions” in section 9(2)(b)—deliberately creating space for empowerment mechanisms beyond shareholding. The law foresaw the need for multiple approaches to transformation and empowered ICASA to make regulations accordingly.
Unfortunately, that hasn’t happened. ICASA’s 2021 regulations stick rigidly to the 30% equity rule and does not include other valid empowerment options under the ICT Sector Code and the B-BBEE Act.
This not only limits investor participation, especially from global firms that may want to bring new technology and competition into the market, but also undermines the principle of inclusive growth.
It also disrupts alignment across government. While the DTIC formally recognises and administers EEIPs through the B-BBEE Codes of Good Practice, ICASA’s regulations don’t fully reflect this. The result is a fragmented, inconsistent framework that discourages innovation and creates unnecessary regulatory risk.
The policy direction is not amending legislation as some have expediently sought to portray it. It is an instrument already available at our disposal to drive inclusive growth and investment now.
The ECA already gives the Minister the power to issue a policy direction, after consultation with ICASA, to ensure the effective application of the law. That’s exactly what I’ve done.
I also want to stress that transformation is not negotiable. This policy direction does not lower the bar. It insists on meaningful, measurable contributions to empowerment, just not in a one-size-fits-all manner. It recognises that different business models require different, but equally impactful, ways of advancing transformation.
Critics who suggest this policy direction creates a loophole are wrong. EEIPs are not exceptions, they are formally endorsed by government, underpinned by law, and subject to strict criteria and oversight. They represent an alternative route to full compliance, not an escape from it.
The bigger picture here is not only about regulatory technicalities. It’s about what this means for ordinary South Africans. When we remove unnecessary obstacles to investment, we enable the rollout of more networks, lower the cost to communicate, and expand access to the internet.
When transformation is broad-based, those benefits extend to SMMEs, youth in digital training programmes, and rural communities getting connected for the first time.
Empowerment should not be confined to a tick-box approach. If a company invests R500 million into broadband rollout in deep rural areas, creates 1 000 new ICT jobs, or incubates 20 black-owned tech enterprises. That is transformation and it is the kind of progress we should welcome.
That’s why this policy direction matters. It’s about bringing our laws, our regulator, and our national development goals into alignment.
It’s about sending a clear message to the world that South Africa is open for investment, serious about transformation, and committed to connecting more people to opportunity.
This isn’t a shortcut. It’s a step forward, for the benefit of all.
Solly Malatsi is the Minister of Communications and Digital Technologies.
This article originally appeared in the Sunday Times and is published with permission.
‘Disclaimer - The views and opinions expressed in this article are those of the author(s) and not necessarily those of the BEE CHAMBER’.