Parliamentary portfolio committee on communications & digital technologies chairperson Khusela Sangoni-Diko wants minister Solly Malatsi to withdraw his directive to amend regulations that enable international players to enter the South African market using a different set of empowerment rules. The presidency has said the minister’s actions are within the law. In a notice gazetted on Friday, Malatsi directed the Independent Communications Authority of South Africa (Icasa) to “urgently consider” the use of equity equivalent investment programmes (EEIPs) in the ICT sector to broaden broadband access in the country.
At the weekend, the portfolio committee rejected the minister’s move, with Sangoni-Diko issuing a scathing response. “These policy directives are an affront to the centuries-old fight for equity and redress by the black majority in this country,” she said. Malatsi’s department had gazetted a policy directive on the role of EEIPs “as a mechanism to accelerate broadband access” in May.
Since then, Malatsi has been under fire over the move, largely seen as a way to allow Elon Musk’s company to operate in South Africa without having to give equity in terms of BEE. EEIPs are not new and have been used by a number of international ICT firms such as Microsoft, IBM and Amazon. The issue in dispute is their specific use in telecommunications.
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But the portfolio committee under Sangoni-Diko is unequivocal in its stance. “Mr Malatsi, in his capacity as minister, has neither the legislative nor moral authority to reverse the gains of democracy through this unilateral action, unsupported by the regulator, Icasa, or the department he leads,” she said. “To the best of our knowledge, he has once again also not sought the approval of the cabinet to gazette the said policy directives, which could be reasonably expected given the import of the matter.” At present, the rules regarding who can acquire a licence to provide electronic communications services or operate a network require that at least 30% of shares must be in the hands of historically disadvantaged people.
EEIPs 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”. Malatsi said he had weighed the views and submissions from various telecoms industry representatives and other stakeholders.
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