Latest news with #EquityEquivalentInvestmentProgrammes
Daily Maverick
24-06-2025
- Business
- Daily Maverick
Starlink promises internet for rural SA schools — if BEE rules bend
The satellite operator has dangled a deal: free high-speed connections for 5,000 isolated schools in South Africa. In a letter to Trade, Industry and Competition Minister Parks Tau, Starlink's senior director of market access, Ryan Goodnight, made a simple case: let us in under the Equity Equivalent Investment Programmes (EEIPs) instead of the traditional 30% local ownership requirement, and we'll transform rural education connectivity. 'Today, millions of children are being denied access to education resources because South African broadband networks do not extend to the most rural parts of the country,' Goodnight wrote. The deal? Fully funded Starlink kits and service for more than 5,000 rural schools, complete with installation and maintenance support through local South African companies. But the Starlink letter also reveals the company's growing impatience. Despite being 'interested in providing high-speed internet to South Africa since we first deployed our constellation', efforts remain grounded by what it calls outdated ownership regulations – a requirement that Starlink says it cannot meet while maintaining operational control across its global network. But you know this already. Opening Malatsi's box At the centre of the situation sits Minister of Communications and Digital Technologies Solly Malatsi, who has tried to thread the needle between transformation imperatives and technological pragmatism. During a parliamentary portfolio committee meeting on 27 May, Malatsi defended his policy directive allowing the Independent Communications Authority of South Africa (Icasa) to recognise EEIPs, arguing that the work 'predates the events of last week [President Cyril Ramaphosa's fateful visit to Washington]' and represents continuity rather than capitulation. 'The intention is to ensure a whole and consistent application of the B-BBEE Act and the ICT sector codes,' Malatsi told the committee, explaining that the directive aims to bring telecommunications regulation in line with what already exists in other sectors. Microsoft, IBM and Amazon already use EEIPs successfully in South Africa – why not satellite internet providers too? Malatsi's reasoning rests on section 3 of the Electronic Communications Act, which allows ministerial policy directives consistent with national policies. He argues that Icasa's regulations have created a gap, failing to wholly consider the ICT sector code's provisions for alternative pathways to transformation compliance. Defending the empowerment dream But if Malatsi thought his careful legal reasoning would satisfy critics, he was mistaken. The portfolio committee meeting descended into accusations of undermining South Africa's transformation agenda. Committee member Oscar Mathafa argued that the directives 'dilute or undermine those particular hopes' of voters for social justice and equity, and Colleen Makhubele described the approach as 'a denial of a constitutional right of a historically disadvantaged group to own the economy'. Committee members also accused Malatsi of 'trying to amend legislation using a ministerial policy directive'. Perhaps most damaging was an observation that 'we are altering our legislation for Starlink whereas where it goes to operate in other countries it did not utilise this coercion'. An industry body, the Association of Communications and Technology, has tried to stake out middle ground, supporting the minister's effort to resolve regulatory ambiguity while insisting on 'regulatory parity' for all players. Its chief executive, Nomvuyiso Batyi, who was critical of Malatsi in her last conversation with Daily Maverick, sent a careful statement: 'We've supported the roll-out of satellite technology in South Africa, within the same rules that everyone else follows.' The association's support for EEIPs comes with a crucial caveat – implementation must be 'transparent, consistent, and with an equal application of the law'. Network operator ground offensive Faced with potential satellite competition, South Africa's network operators have been aggressive in demonstrating their commitment to reducing data costs and expanding connectivity. The numbers they presented to Parliament are impressive. MTN claims a 46% price reduction on 1GB bundles since 2019, whereas Vodacom reports that effective rates have decreased by 50% over two years. Telkom says that per-gigabyte costs have dropped from about R99 in 2010 to R79 today, and Cell C has reduced data rates by more than 28% since 2023. These operators are also making substantial infrastructure investments, spending more than R143-billion in the past five years alone – which means jobs, not just internet from the sky. MTN invests about R9-billion a year in capital expenditure, achieving 99% 2G coverage, 98.9% 3G coverage and 97.8% LTE coverage. Its 5G now covers nearly 45% of the population. Vodacom has pledged R60-billion over the next five years for network development, expanding 5G population coverage from 20.6% in 2022 to 51.7%. Telkom says its mobile network covers 85% of the population directly, extending to 99% through roaming agreements. Rural connectivity A focus on rural connectivity is particularly relevant in view of Starlink's school promise. Vodacom's rural coverage has risen from 89.63% in 2023 to 95.4%, with a target of 97%. Rain, despite being the smallest operator, covers 61 million people with 4G and 21 million (35% of the population) with 5G. Universal service obligation (USO) achievements also provide context. MTN claims a 100% USO scorecard achievement, having invested R380-million over the past decade. It has connected 1,360 mainstream schools and 140 special needs schools, also providing laptops, printers and projectors. Vodacom has connected 3,000 schools, 1,500 beyond its obligations, and 934 of the 4,000 institutions required by new spectrum-allocation obligations. Telkom works with the government on SA Connect to connect 40,000 government institutions, and Rain has connected 2,166 public service institutions. But there are problems that satellite providers like Starlink would largely avoid. MTN spent more than R4-billion in 18 months to secure its network against load shedding. Telkom reported more than 2,000 vandalised sites costing more than R300-million to repair. Starlink's infrastructure in space is immune to load shedding and vandalism, potentially offering more reliable service to rural areas. But this advantage comes at a cost – about R900 a month, based on pricing in Botswana, plus equipment costs of R3,200 to R6,700. Operators want regulatory reform, fast-tracked spectrum access and infrastructure sharing. And they want OTT players (read: WhatsApp and Netflix) to finally pay up for riding their pipes. For now, Starlink remains in orbit. Whether it lands with a bang or a crash depends less on tech and more on who controls the regulatory runway. And if you're in rural Limpopo waiting for decent download speeds, you probably don't care if it's a billionaire's satellite or a homegrown telco – you just want it to work. DM
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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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
09-06-2025
- Business
- IOL News
‘Transformation is not a favour, it's a necessity,' Says Ramaphosa as Starlink fight heats up
President Cyril Ramaphosa, reiterating government's stance on economic transformation policies despite huge backlash from opposition parties. Image: ANC/X President Cyril Ramaphosa has once again defended South Africa's Broad-Based Black Economic Empowerment (B-BBEE) Act and the Employment Equity Act, saying the country must reject the 'false notion' that it must choose between economic growth and transformation. Ramaphosa's remarks, made in his weekly newsletter on Monday, after weeks of controversy over a policy proposal by Communications and Digital Technology Minister Solly Malatsi to ease B-BBEE requirements for satellite communication services such as Elon Musk's Starlink. The proposal sparked backlash from opposition parties, including the Economic Freedom Fighters (EFF) and the uMkhonto weSizwe (MK) Party, which argued that it would allow foreign companies to bypass empowerment laws. EFF described the proposal as a 'backdoor for foreign multinationals' to exploit Equity Equivalent Investment Programmes (EEIPs) to sidestep B-BBEE compliance. The MK Party called it a 'treacherous blueprint' to dismantle state capacity and strike deals with foreign tech oligarchs. Despite this, Ramaphosa stood by the policy, arguing that B-BBEE is not just a policy preference but a constitutional imperative. He invoked the 70th anniversary of the Freedom Charter, which proclaimed that 'the people shall share in the country's wealth.' 'Our Constitution reflects the promise we made to one another and to future generations to redress the injustices of our past and realise the full potential of our country,' Ramaphosa wrote. 'For this reason, we reaffirm that broad-based black economic empowerment is not just a policy choice but a constitutional imperative.' Video Player is loading. 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Next Stay Close ✕ Ramaphosa said the world is currently in a 'polycrisis,' characterised by global conflict, economic stagnation, mistrust in institutions and environmental degradation, challenges that South Africa is not immune to. He argued that this is not the time to backtrack on empowerment but to double down. 'We must make our empowerment policies more meaningful,' Ramaphosa said. 'Economic growth without transformation entrenches exclusion, and transformation without growth is unsustainable.' He emphasised that South Africa has made measurable progress since 1994 through a 'robust legislative framework' anchored by the B-BBEE Act and the Employment Equity Act. 'We have seen real changes in ownership patterns, including more businesses owned by women. We have seen changes in management control, enterprise development and skills development,' he wrote. According to Statistics South Africa, between 2006 and 2023, real household income increased by 46% for black Africans, 29% for coloured households, and 19% for Indian households. However, Ramaphosa acknowledged that, on average, white households still earn nearly five times more than black African households. 'This is the gulf we must close through deliberate and sustained efforts to expand opportunity,' he said. 'Transformation is not a favor, it is a necessity.' Ramaphosa criticised those who continue to benefit from historical privilege while challenging B-BBEE in the courts, calling for national unity on the issue. 'We must dispense with the false notion that we must choose between growth and transformation,' he said. 'B-BBEE is not a cost to the economy; it is an investment in it.' He said this commitment underpins government programs like the Black Industrialists Programme and the newly established Transformation Fund, aimed at supporting innovative black-owned enterprises. 'There is a critical need for black-owned businesses to access funding on affordable terms,' he said. He called on private banks to review their lending practices. 'They have the resources to make the greatest impact.' Ramaphosa said the Public Procurement Act must be used to expand opportunities for businesses owned by women, youth and persons with disabilities. 'Transformation must reach into every sector, whether it is mining, construction, energy, IT or agriculture,' he said. 'The private sector should use their supply chains far more deliberately to empower more black-owned businesses, not just to improve their B-BBEE scorecard, but to grow and diversify their supplier base.' As the country develops infrastructure, green industries and localized manufacturing, transformation must remain central, he added. 'The transformation we seek is not about ticking boxes. It is about building a resilient, just economy for generations to come,' he wrote in the newsletter. 'I call on all South Africans, and in particular the private sector, to recommit to economic transformation.' Meanwhile, Starlink, owned by Musk's SpaceX, does not currently hold an operating license in South Africa. Its efforts to obtain one reportedly failed after Musk rejected the requirement that foreign telecommunications companies sell a 30% stake to historically disadvantaged South Africans in order to operate. In February, US President Donald Trump signed an executive order aimed at isolating South Africa, citing allegations of anti-white policies and accusing the government of harboring hostility toward the US and its allies, including Israel. This action was widely viewed as part of Musk's pushback against South Africa's empowerment regulations. In response, Ramaphosa led a delegation to Washington on May 21 in an attempt to salvage key trade agreements and attract new investment amid the diplomatic tension. IOL Politics
IOL News
28-05-2025
- Business
- IOL News
Starlink and South Africa: No exceptions in telecom regulation reform
On Tuesday, Minister Solly Malatsi appeared before the Portfolio Committee on Communications and Digital Technologies to justify his directive, which seeks to 'align' the Electronic Communications Act and the ICT Sector Code. Image: Jonathan Raa/NurPhoto/AFP The Association of Comms and Technology (ACT) has welcomed the recent directives from the Minister of Communication, Solly Malatsi regarding the alignment of ICASA's empowerment regulations with the B-BBEE ICT Sector Code. On Tuesday, Malatsi appeared before the Portfolio Committee on Communications and Digital Technologies to justify his directive, which seeks to 'align' the Electronic Communications Act and the ICT Sector Code. "This policy development, coupled with a proposed inquiry into the necessity of I-ECNS licence applications, marks a pivotal moment for South Africa's telecommunications sector, potentially reshaping the landscape of competition and transformation," ACT said in a statement. As the industry stands on the brink of significant regulatory reforms, ACT said it urges that these changes be implemented with transparency, consistency, and equitable enforcement of the law. "If executed properly, this approach could herald a new era for the sector, fostering an environment conducive to both innovation and investment. At the heart of ACT's response is a strong endorsement for the Minister's initiative to have ICASA formally acknowledge Equity Equivalent Investment Programmes (EEIPs)," the Association further said. The organisation is poised to make comprehensive submissions reflecting its commitment to bridging regulatory ambiguities between ICASA's ownership rules and the B-BBEE ICT Sector Code. 'We support efforts that contribute to the resolution of regulatory complexities while promoting South Africa's transformation agenda,' Nomvuyiso Batyi, CEO of ACT said. ACT added that it advocates for innovative, scalable solutions that not only deliver impactful results but also restore policy transparency and bolster investor confidence. "The Association firmly believes that increased competition, particularly in terms of connectivity solutions to underserved communities, is a vital component of this growth. We are particularly supportive of frameworks that ensure all operators, whether terrestrial or satellite, navigate the same regulatory landscape,' Batyi said. "This is essential for fostering a sustainable and competitive digital economy that can adapt to the rapidly evolving technological landscape. We have consistently been on the pulse of this issue. We've supported the rollout of satellite technology in South Africa, within the same rules that everyone else follows,' Batyi added. Meanwhile, the Economic Freedom Fighters (EFF) condemned Malatsi's recent actions aimed at enabling Elon Musk's satellite company to operate in South Africa without adhering to local ownership laws. The party expressed deep concern over what it described as an unlawful attempt to bypass legislation designed to protect local economic interests and transformation. This 'alignment' would allow foreign entities to operate without complying with the 30% local ownership requirement mandated by law for previously disadvantaged groups. Instead, the EFF said Malatsi wants Starlink to use 'Equity Equivalents' under the Broad-Based Black Economic Empowerment (B-BBEE) Act, an approach the EFF describes as an 'anti-transformation participation' strategy. EFF spokesperson Sinawo Tambo said: "In what can only be described as an unlawful attempt at subverting the powers of the Parliament of South Africa by using a Ministerial Policy Directive, Minister Malatsi characterises the amendments he wants to make to two Acts of Parliament as regulatory alignment." Trade union, Congress of South African Trade Unions (Cosatu) said it will be engaging with the relevant Departments for Communications and Digital Technologies as well as Trade, Industry and Competition to seek assurance that any such proposals remain in line with existing legislation, in particular the Broad Based Black Economic Empowerment (BBBEE) Act, as well as the constitutional imperative to advance transformation across all sectors of the economy. The union said it noted the excitement on social media about Starlink. "As a Federation we remain guided by the law and will at all times jealousy guard its supremacy, and our transformation journey as mandated by the electorate and guided by the Constitution. The Federation's primary concerns remain defending and creating badly needed jobs, spurring economic growth, tackling anti-competitive monopolistic practices, advancing socio-economic transformation and affirming the rule of law."
eNCA
28-05-2025
- Business
- eNCA
Debate over gazetted ICT policy changes continues
JOHANNESBURG - Communications Minister Solly Malatsi is defending his recently gazetted policy directive. It seeks to formally recognise Equity Equivalent Investment Programmes in the ICT sector. The Portfolio Committee on Communications and Digital Technologies says the minister has no powers to effect such a change, which has been criticised as opening a backdoor for Elon Musk's Starlink. The policy change could allow companies in the Information and Communications sector to operate without 30% black ownership. The department, however, says the move has nothing to do with Elon Musk's Starlink.
