IRR Backs Malatsi Move to Relax BEE Rules in ICT Sector

The Institute of Race Relations (IRR), a Johannesburg think tank, has welcomed a directive from Communications Minister Solly Malatsi which would relax certain black economic empowerment (BEE) requirements in the information and communication technology (ICT) sector.

Malatsi’s directive would allow companies looking to invest in South Africa’s ICT sector to meet BEE requirements through initiatives such as social upliftment projects. Currently, companies are expected to give up 30% of their shareholding to “previously disadvantaged individuals”.

The directive from Malatsi, who is a member of the Democratic Alliance, has been met with hostility by its partner in the Government of National Unity, the African National Congress (ANC). The Common Sense reported on it here.

The IRR argues that strict empowerment rules have slowed growth in internet access, especially in rural areas, and that easing these rules could help speed up infrastructure rollout and improve connectivity in communities still affected by apartheid-era spatial planning. It says investment should be encouraged, regardless of the race of investors, if the goal is to improve network access.

According to the IRR, Malatsi’s move reverses a 2022 tightening of BEE ownership rules by the sector’s regulator, the Independent Communications Authority of South Africa (ICASA). The directive states that the stricter rules are neither legally sound nor practical, language the think tank describes as unusually strong in the debate around empowerment policy. The IRR said these “strong words mark a turning point in the rise and fall of BEE, as never before has a ministerial directive so starkly and sweepingly cut back a BEE regulation”.

The IRR also rejected criticism from the ANC and Economic Freedom Fighters which said the minister is overstepping his powers. The think tank points to existing law that allows ICASA to grant exemptions from licensing rules to internet providers when regulations block investment.

The IRR has also renewed calls for faster approval of satellite internet services, such as Starlink, arguing that further delays are unnecessary and harmful to South Africans who need affordable internet access and economic opportunities.