The year 2025 came to an end without the resolution of an apparent conflict over extending Equity Equivalent Investment Programmes (EEIPs) into the telecoms sector – a policy shift that could see billions in additional foreign direct investment and the creation of thousands of jobs.
ICT veteran commentator Adrian Schofield says the proper application of EEIPs as an alternative to the 30% historically disadvantaged ownership requirement under the Electronic Communications Act for companies to secure a telecoms licence could greatly advantage South Africa.
“Not only would we see broadband coverage being extended to rural areas where traditional operators may find it prohibitively expensive to deploy infrastructure given how dispersed our people are in those regions but also investments into the local economy of billions,” says Schofield.
This comes as recent Department of Trade, Industry, and Competition (DTIC) figures show that, as 2025 concluded, multinationals – including HP, Microsoft and IBM – had invested at least a cumulative R12.8 billion in South Africa through EEIPs under successive B-BBEE policy frameworks, instead of entering equity-based empowerment schemes.
Between 2015 and 2023 alone, multinationals investing over R5.4 billion into active EEIPs created and induced an estimated 12,464 jobs, a 2024 DTIC study showed.
Schofield adds that it doesn’t make sense that the DTIC and the Department of Communications and Digital Technologies haven’t yet aligned regulations given they should have the same goal of leveraging investment in enabling technology.
“The framers of the regulations had no concept of the impact of low-earth orbit satellite coverage. Time to catch up,” he says.
In mid-December, the minister of communications and digital technologies, Solly Malatsi, gazetted his final policy direction recognising EEIPs, directing the Independent Communications Authority of SA (ICASA) to use these as an alternative to the Electronic Communications Act’s requirement that telecommunications network service providers be 30% owned by historically disadvantaged groups before they can get a licence.
This drew an outcry from the Portfolio Committee on Communications and Digital Technologies, the Economic Freedom Fighters, and the ANC, who criticised the minister for what they called “an unlawful move that bypassed Parliament”.
Malatsi’s initial policy directive in May was widely seen as paving the way for Elon Musk’s Starlink to launch in South Africa. Presidential spokesperson Vincent Magwenya responded to the backlash, stating the minister sought to accelerate broadband access to underserved areas and was not favouring any single company.
“The application for a licence within the communications and ICT sector is not only from Starlink, so we should just avoid the trap of getting fixated over Starlink,” Magwenya explained. “There are four or five other companies that have expressed interest in providing their services here in SA.”
ICASA says it “will review and consider the policy direction through its established regulatory processes”.
In May, the B-BBEE ICT Sector Council welcomed Malatsi’s proposal to expand access to electronic communications network service licences, saying it “has the potential to expand the market and increase the participation of small, medium, and micro enterprises if implemented within a robust transformation framework”.
However, it cautioned that allowing EEIPs “risks re-entrenching exclusion, allowing historically privileged entities to again dominate under the guise of investment or innovation.”
Investment paradox
In the ICT sector, EEIP contributions are measured either against 30% of the value of a multinational’s South African operations, or against 4% of its total local turnover. EEIP initiatives must be aligned to government’s strategic economic policies and programmes such as the National Development Plan, which aims to eliminate poverty and reduce inequality by 2030.
Among international ICT companies that have invested in such programmes are HP, which had its scheme approved in 2007 – some five years before the ICT Sector Codes came into being. HP’s EEIP was for 6.5 years at a value of R93.2 million.
Subsequently, Microsoft, IBM, Dell, Samsung and Amazon Web Services all entered into agreements. Microsoft’s 2024 investment of R1.32 billion under a deal set to last ten years is the latest of these, according to a recent presentation to Parliament’s Portfolio Committee on Communications and Digital Technologies.
In a DTIC statement on the Microsoft deal, then minister of trade, industry and competition Ebrahim Patel said this was the “largest by a single company under the equity equivalent provisions of the legislation”.
In April, Samsung announced that it had secured a level one broad-based black economic empowerment rating for the seventh year running, mostly through its EEIP, launched in May 2019 in conjunction with what was then the Department of Trade and Industry.
“This rating re-affirms Samsung’s continued drive to genuine economic transformation in South Africa and investment in the various pillars of the scorecard,” it said in a statement.
Overall, 23 partnerships across the automotive, ICT and financial services sectors have been entered into between multinational companies and the DTIC. In 2022, DTIC told Parliament that the value of contributions from the ICT sector was the second highest of all industries, although approved deals only made up 27% in terms of volume.
Yet in October, the B-BBEE ICT Sector Council said it had only received three EEIP applications over the past 12 months. In addition, the council says it encounters pushback when trying to verify the investment commitments and deployment of funds by multinational companies through EEIPs.
In June 2025, President Cyril Ramaphosa said since its inception, the EEIP has encompassed a broad range of sectors and onboarded some of the world’s leading multinational firms such as Hewlett-Packard, Samsung, JP Morgan, Amazon, IBM and automotive firms such as BMW, Volkswagen, Nissan and Toyota.
“These firms have leveraged the EEIP to direct investment into local development, to incubate black, youth and women-owned businesses, and to fund skills development. This has in turn assisted government in achieving a number of policy and also infrastructure goals,” Ramaphosa said.
Ramaphosa noted that Equity Equivalents have been proven to be a practical B-BBEE compliance tool for multinationals operating in South Africa “and we will continue to leverage them in pursuit of economic growth and job creation”.
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