Some local analysts have welcomed the newly gazetted policy directives by the department of communications & digital technologies on the Equity Equivalent Investment Programme for Multinationals, with one saying they should be prescriptive on how foreign investment can help the country.
Two politicians, however, have separately described the directives as a “capitulation” and a flouting of the government’s policies.
The directives, published on Friday under the Electronic Communication Act, seek to relax the existing requirement that foreign investors hold at least 30% of equity in partnership with historically disadvantaged black South Africans, to satisfy BEE requirements.
Communications and digital technologies minister Solly Malatsi is set to appear before the parliamentary portfolio committee on Tuesday to explain the directives.
On Saturday, Khusela Diko, the chairperson of the committee, said the directives appear to favour Starlink, the international telecommunications provider that is a wholly owned subsidiary of American aerospace company SpaceX, l owned by controversial SA-born businessman Elon Musk.
Musk has previously said the only reason his business is not allowed to operate in SA is because he is not black, which has been strongly debunked.
On Sunday, Diko said she could not comment further until after the deliberations of the ANC NEC subcommittee on communications and the portfolio committee meeting on Monday.
William Gumede, associate professor in the School of Governance at Wits University, said he supported Malatsi’s intention to relax certain aspects of the Act as it was not beneficial in its current form.
“We have a high level of unemployment in the country, so we need all the foreign investment we can get. I think what we need to do is to exempt certain strategic companies that come into SA from the current policy, because the policy only enriches people who are connected to the ANC,” he said.
We have a high level of unemployment in the country, so we need all the foreign investment we can get. I think what we need to do is to exempt certain strategic companies that come into SA from the current policy, because the policy only enriches people who are connected to the ANC
— William Gumede
Political researcher and analyst Ebrahim Fakir said the new directives should be prescriptive on how foreign investment can help the country.
“He [Malatsi] is trying to have someone [Musk] who will come and invest [without the need to grant a 30% stake in the company to black South Africans] and still comply with other things such as [giving out] bursaries, supply development and local procurement. The only problem is that he cannot do that, [because] it is not in his powers; he has to go to court or parliament for the amendment.”
Black Business Forum CEO Kganki Matabane said the forum’s members were still reading the directives and would make their stance clear by submitting suggestions.
“I think the amendments can be made as long as they are not made to try to accommodate one company or one individual, because that means we’ll have lost our sovereignty as a country, and that cannot be allowed.
“We are not against any investment in SA. We’ll participate in the process, but the principle remains. We cannot bend our legislation and rules to accommodate one company or one institution. If it brings investment, it’s fine,” he said.
Nobuntu Hlazo-Webster, the deputy leader of Build One SA, said the party is concerned by what appears to be a tailored move to make way for Musk’s company.
“This is not transformation, it’s capitulation. The message being sent is that if you are a powerful foreign billionaire, you can sidestep SA’s laws, while our local businesses are forced to jump through hoops. What begins with special concessions, ends in state capture,” Hlazo-Webster said.
ActionSA leader Herman Mashaba said it was a sad moment in the country’s history to see a democratic government prepared to flout its policies to accommodate a billionaire.
“It deeply hurts me ... [that] we are prepared to change the country’s transformation laws to accommodate this,” he said.
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