If the Independent Communications Authority of South Africa (ICASA) “wants to promote inclusive growth in rural South Africa it can open the gates to Starlink without delay through granting an exemption [from BEE], as explicitly provided for in law”.
So says the Institute of Race Relations (IRR) in a statement on Minister of Communications and Digital Technologies Solly Malatsi’s policy directive to ICASA to relax BEE requirements in its licensing regulations.
The IRR notes that this “marks an inflection point in the rise and fall of BEE”.
Gabriel Crouse, executive director of IRR Legal, says the minister’s actions “partly follow IRR Legal’s recommendation in its formal submission to the earlier draft policy directive”.
IRR Legal urged Malatsi’s department to recognise that its stated mission “to attract investment” could be achieved regardless of the race of investors in South African growth.
“BEE impedes investment, so relaxing BEE is a very simple way to grow investment. IRR Legal showed how this could be done immediately, practically, and legally.
“Furthermore, IRR Legal submitted that the government’s stated purpose of increasing internet access, particularly in rural areas formerly devastated by apartheid spatial planning, could be achieved by relaxing BEE.
“BEE slows growth in rural areas, so relaxing BEE helps overcome the legacy of apartheid.”
Crouse says Minister Malatsi’s order to relax BEE regulations “is, in this context, welcome”.
“However, Malatsi did not remove all regulatory impediments to growth in his department. Rather, he only confronted the Ownership Regulations, which were adjusted by ICASA to tighten BEE in 2022.
“Malatsi’s policy directive states that this tightening of BEE was ‘not permissible in law, nor is it desirable as a matter of fact’.”
Crouse adds: “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 closest precedent is Treasury’s previous exemptions from BEE for specific projects in public procurement. However, Malatsi’s directive is more broad-based and long lasting.
“It is no surprise that there has been a pro-BEE backlash among some of the rich and powerful.”
Crouse says IRR Legal anticipated the pushback in its July submission “and explicitly recommended what steps the minister could take to avoid this problem”.
“Section 6 of the Electronic Communications Act states that ICASA can exempt satellite internet service providers from licensing requirements if BEE is impeding investment. This makes it clear that Parliament’s intention in passing the law was to let ICASA exempt investors from regulatory requirements, including BEE requirements, when red tape blocked growth.
“IRR Legal asked Malatsi to make this point explicit in his policy directive, so that uninformed people would not falsely accuse him of circumventing the law. His failure to do so points to the reluctance of South African politicians to promote growth policies unambiguously.
“In practical terms, South Africans should know that there is no need for a delay in letting in Starlink. If ICASA wants to promote inclusive growth in rural South Africa it can open the gates to Starlink without delay through granting an exemption, as explicitly provided for in law. The same goes for all similar service providers.”
Crouse concludes: “All delays have been, and remain, unnecessarily harmful to South Africans seeking opportunity.”
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