South Africa Proposes Changes to BEE Requirements to Boost ICT Investment

South Africa Proposes Changes to BEE Requirements to Boost ICT Investment. Image for illustration purposes only, generated with AI.

The Department of Communications and Digital Technologies has announced proposed changes to licensing and Black Economic Empowerment (BEE) requirements in a bid to attract more foreign investment in the ICT sector.

The draft policy introduces an Equity Equivalent Investment Program (EEIP), allowing multinational companies to meet empowerment criteria without complying with traditional ownership rules. Instead, firms can contribute through alternative means such as skills development and economic inclusion initiatives.

Aiming for Broader Investment and Inclusion

The department emphasized that the adjustments are designed to “broaden the space” for international investors, particularly those introducing new or disruptive technologies, while aligning with South Africa’s socio-economic goals.

“This is about ensuring that new market entrants can make commitments that support South Africa’s development and that all players contribute meaningfully to equity, skills development, and economic inclusion,” a spokesperson stated.

The move comes amid reports that the government is considering exemptions for Elon Musk’s Starlink, a satellite internet service, to operate in the country despite not meeting the standard 30% black ownership requirement. However, Communications Minister Solly Malatsi denied that the policy shift was specifically tailored for Starlink or the U.S.

“It’s not about relaxation—it’s about alignment,” Malatsi said, pointing out that similar EEIP frameworks already apply in sectors like automotive, where companies like BMW operate.

US Relations and Economic Implications

The announcement follows President Cyril Ramaphosa’s recent visit to Washington, where he sought to mend strained relations with the U.S. Analysts suggest the policy change could ease tensions and encourage further American investment.

Industry experts have welcomed the proposal, arguing that services like Starlink are crucial for connecting remote areas where traditional internet infrastructure is lacking.

“Starlink provides access to regions that otherwise wouldn’t have it—schools, police stations, and community centers in rural areas,” one analyst noted. “This isn’t about abandoning BEE principles but finding a balance to enable critical services.”

Since 2010, over 500 U.S. companies, including Microsoft, Apple, and Google, have operated in South Africa under similar equity-equivalent programs. The new policy aims to extend these opportunities to the ICT sector, fostering growth while maintaining empowerment objectives.

The draft is now open for public comment before finalization. If approved, it could mark a significant shift in South Africa’s approach to foreign investment in telecommunications and digital services.

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