Malatsi Opens New Path for ICT Licences and Investment

South Africa’s next broadband internet upgrade could be decided less by technology than by how the country measures empowerment.

Communications and Digital Technologies Minister Solly Malatsi, of the Democratic Alliance, has issued a policy directive that attempts to widen how empowerment compliance works in the ICT sector. His department says he "has today gazetted a policy direction on the role of equity equivalent investment programmes (EEIPs) in the ICT sector". The practical aim is to make entry easier for some internet firms while keeping an empowerment requirement in place.

However, there is a dispute over what counts as empowerment. The department points out that parts of the licensing framework require at least 30% ownership by historically disadvantaged individuals. This, in practice, means that firms that want to invest in the ICT sector, must surrender 30% of their businesses to local partners who do not necessarily add value to their investment. This requirement has deterred and delayed investment and slowed network rollout.

An alternative to forcing firms into giving up ownership of their businesses is to allow them to invest in social upliftment projects instead of having to surrender equity.  EEIPs are one such alternative empowerment scheme.

These schemes are already recognised in empowerment policy for qualifying multi-nationals. Instead of selling equity, a company commits money to programmes that support local skills, enterprise development, and wider socio-economic goals.

By making it easier for firms to invest, competition increases, prices for consumers fall, and network quality and availability increases, with the broader economy benefiting as a consequence.

In practice, therefore, what Malatsi has proposed is that instead of forcing firms to give away billions to a handful of politically connected people, it would be better if their empowerment obligations amounted to programmes that benefited ordinary people and the broader South African economy.

Malatsi’s move, therefore, signals a shift toward judging empowerment by enforceable commitments and delivery, not only by the share register. It also fits a broader government argument, supported publicly by President Cyril Ramaphosa in a June 2025 weekly message on the government website, that EEIPs can be used within the existing empowerment framework.

However, Ramaphosa’s own party, the African National Congress (ANC) has rejected the directive. It said it was: "deeply concerned by the Government Gazette issued on 12 December 2025, by the Minister of Communications and Digital Technologies, Mr Solly Malatsi. The Gazette introduces policy directions that exceed the Minister’s legislative authority."

The minister's deputy, Mondli Gungubele, who is close to Cyril Ramaphosa said the minister had exceeded his authority and was threatening South Africa's empowerment policy framework.

The chair of the parliamentary portfolio committee on communications, Khusela Diko, has also criticized the minister saying, "These policy directives are an affront to the centuries old fight for equity and redress by the black majority in this country. They further unintelligibly obfuscate existing law in a spirited attempt to circumvent the mandatory 30% equity ownership by historically disadvantaged groups as a requirement for electronic communications services licensing as under section 9(2)(b) of the Electronic Communications Act (ECA)."

The directive now serves as a test for the Government of National Unity. Will the government adopt policies that make it easier for firms to invest, or will the ANC force a climb down in favour of its preferred approach of handing massive shareholdings to politically connected individuals?

If the directive is implemented and survives political resistance, South Africans could see more investment and stronger competition in connectivity over time. If it turns into a legal fight, the likely outcome is delay, lost capital, and another missed chance to expand affordable network access.

There are many prominent examples of firms that have used EEIPs over the past 20 years. Examples include JP Morgan, Samsung, Caterpillar, Dell, IBM, Microsoft, Amazon, and Hewlett-Packard.

Critics, however, say that even EEIPs are a foolish idea, because investment and infrastructure development are in and of themselves empowering. Forcing firms into EEIP obligations also deters investment, although not to the same extent as equity-based empowerment.