B-BBEE ICT Sector Council raises alarm over new BEE policy proposals

The B-BBEE ICT Sector Council has voiced strong concerns regarding recent B-BBEE government policy proposals that could undermine South Africa’s ongoing efforts toward inclusive economic transformation within the ICT sector.

In a statement issued Tuesday evening, the council welcomed the Minister of Communications and Digital Technologies’ announcement to open new individual electronic communications network service (IECNS) licenses but raised serious concerns. 

The recent gazetting of a new B-BBEE policy, which could potentially facilitate the entry of companies like Starlink, comes after a high-profile meeting between President Cyril Ramaphosa and US President Donald Trump, whose delegation included Elon Musk, the owner of Starlink.

“We see this as an opportunity to expand market access and promote increased participation of small, medium, and micro enterprises (SMMEs), provided it is implemented within a robust transformation framework,” the Council stated.

However, their optimism was sharply tempered by apprehensions about accompanying policy proposals to allow Equity Equivalent Investment Programmes (EEIPs) to replace the legislated 30% Historically Disadvantaged Individual (HDI) ownership requirement set out in the Electronic Communications Act (ECA). 

The Council warned that “introducing EEIPs as an alternative to the 30% HDI ownership requirement could reverse the fragile gains made in sector transformation,” risking a resurgence of exclusionary practices.

In their statement, they stated that the ownership requirement under the ECA serves more than just compliance; it is a statutory tool designed to promote direct ownership and control by historically disadvantaged South Africans, reflect the country’s demographic priorities, and support inclusive economic growth.

“This mechanism ensures that licensees contribute to infrastructure roll-out, universal access, and broad-based redress - not charity or peripheral impact,” the Council explained.

Alarmingly, the council said that some actors opposing these measures have historically resisted BEE and other transformation efforts, raising questions about their motivations. 

“These developments threaten to sideline South Africa’s legal framework and long-standing transformation objectives,” the statement warned, adding that some local beneficiaries of B-BBEE are now advocating measures that could exclude the very communities they were meant to uplift.

The Council rejected the current form of EEIPs, citing “glaring gaps” in transparency and measurable impact. 

The organisation stated that adopting such programs could set a dangerous precedent, allowing dominant incumbents and multinational corporations to bypass local ownership requirements while reaping the benefits of operating in a strategic sector.

Potential Risks and Broader Implications

The institution highlighted several risks associated with these proposed changes arguing that, first and foremost among them - is the threat to local industry and jobs.

“An infrastructure-light, foreign-controlled model risks decimating local Internet Service Providers (ISPs), SMMEs, and Wireless Internet Service Providers (WISPs), especially in underserved rural areas,” the Statement cautioned. 

It argued that such a shift could undermine national broadband initiatives like SA Connect and lead to South Africa’s digital payments flowing out of the country without contributing to local economic development.

Moreover, the council warned that establishing these principles in the ICT sector could set a dangerous precedent for other strategic industries with B-BBEE ownership requirements. 

“This could weaken empowerment models across various sectors, undermining meaningful economic participation by historically disadvantaged groups,” the statement cautioned.

Calls for Transparency and Upholding Transformation Principles

The ICT council demanded a comprehensive review of EEIPs, emphasising that their impact on sector transformation remains marginal and unaccountable. 

They called for mandatory, transparent public reporting on EEIP performance, including sector oversight and measurable Key Performance Indicators (KPIs), to prevent fiscal opacity and ensure tangible impact.

Additionally, the council urged clarity on how new licensees will contribute to the Universal Service Fund and align with the mandate of the Universal Service and Access Agency of South Africa (USAASA).

“Any exemption from contributing to the fund risks creating unfair economic asymmetries and impeding efforts to bridge the digital divide,” the statement read.

The Council appealed to the government to uphold the constitutional and developmental vision of economic justice.

“Transformation is a moral, constitutional, and legislative imperative. It cannot be sacrificed for expediency, foreign lobbying, or narrow commercial interests.”

According to the institution, the B-BBEE ICT Sector Council intends to submit a formal response during the 30-day public consultation period, urging all stakeholders committed to genuine transformation to review and contribute to the dialogue. 

They argued that while ICASA is expected to consider the Minister’s policy directions, these do not preclude comprehensive sector input.

When contacted for comment, Ramasela Matlou, an ICASA spokesperson, stated that the regulator has noted the policy directive and is currently reviewing its contents.

Matlou added that Starlink has not yet applied to enter the South African market.

thabo.makwakwa@inl.co.za

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