🔒 John Matisonn – DA proposes EEP: A viable exception to BEE?

23 Oct 2024, 10:45 by Editor BizNews · BizNews

DA Minister Solly Malatsi has proposed an alternative to BEE ownership requirements for ICT network licenses through the Equity Equivalent Project (EEP), targeting multinational companies. Malatsi’s plan, not yet cabinet-approved, aligns with the DA’s Economic Justice policy.

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By John Matisonn ___STEADY_PAYWALL___

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DA Communications and Digital Technology Minister Solly Malatsi has promised a policy that offers applicants for licenses to provide ICT network services an alternative to requiring 30% BEE ownership.

The alternative, called the Equity Equivalent Project (EEP), already exists in the Department of Trade and Industry (DTIC). Since March 7, 2019 this enabled DTIC to approve investments by IBM, Hewlett-Packard and Microsoft through EEP.

It is available only to multinational companies that have a global policy prohibiting them from allowing shares to local citizens in countries where they operate.

Johannesburg BEE consultant Paul Janisch says the EEP alternative has been successful in some cases but regrets that it is subject to the whims of individual officials’ preferences whether to turn down applications. Janisch has welcomed Malatsi’s proposal, but warned that “the proof lies in how the department applies it.” If its anything like past programmes, he does not expect Starlink to be providing connectivity where it’s needed, according to Janisch.

Under EEP, points are awarded to companies for contributions to local communities that do not include ownership transfers. If managed effectively, it could apply to Elon Musk’s Starlink and his electric car company Tesla, but would also encourage investment by many companies reluctant to dip their toe in South Africans waters because of BEE’s ownership requirement.

It is understood that Malatsi’s plan has not formally been presented to cabinet, since few details of policy compromises between the ANC and its GNU partners have been finalised. However, there is potential for agreement between the ANC and DA, since the DA has a policy for an alternative points system that is not widely known.

The DA’s Economic Justice policy provides for a points system based on the United Nations’ Sustainable Development Goals (SDG). Under this system companies could rack up points for contributions to communities.

The DA’s policy document argues that while BEE has not noticeably reduced poverty, an SDG-linked policy would directly benefit the disempowered rather than the already empowered middle class. It would also discourage corruption and grow the economy and create jobs.

“Instead of expecting strategies such as ownership, management, and diversifying the supplier base to trickle down to broader socioeconomic improvements, we rely on socio-economic investmentsto be the catalyst.”

While it is not based on race but on socio-economic need, “most beneficiaries would be have been classified as black under apartheid.” The difference, says DA policy head Mat Cuthbert, MP, is that the SDG policy is based on disadvantage not on race.

The SDGs goals include ending poverty, ending hunger, providing quality education and ensuring good health, gender equality, decent work and economic growth, reduce inequality, clean water and sanitation, sustaining cities, the oceans and terrestrial ecosystems.

The devil will be in both the way it is implemented as well as the details of the policy. Imaginatively managed, it could encourage investors to invest in local job creation, sustainable agriculture, infrastructure, and cities, and act to protect against climate change.

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