The B-BBEE ICT Sector Council has updated the framework for EEIP deals, in efforts boost SA’s transformation.
To qualify for participation in South Africa’s equity equivalent investment programme (EEIP), a multinational must demonstrate it has a global practice of not divesting shareholding at a local level in any of its international operations.
This eligibility must be supported by an affidavit from the global head of the entity and, in some instances, verified by independent auditors confirming the global non-divestiture policy, says the updated EEIP framework published by the B-BBEE ICT Sector Council.
The updated framework, says the council, is aimed at improving the “efficiency, transparency and effectiveness” of the EEIP approval process within the ICT sector.
In a statement issued yesterday, the council says the updated framework seeks to provide clear guidance on required application information, explanation for each information requirement, defined processes and timelines for application consideration, as well as provisions for the treatment of confidential information.
The council also cautions that incomplete applications may result in extended timelines, as processing will be paused pending the submission of outstanding information.
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“The framework is designed to assist applicants in preparing complete and compliant submissions, thereby avoiding delays in processing.
“Applicants are strongly encouraged to engage with the council during the planning stages of their EEIP proposals to improve the likelihood of successful approval.
“The framework also introduces provisions for ongoing compliance monitoring, which will contribute to building a robust evidence base to support meaningful and sustainable transformation in the ICT sector.”
The ICT council, established in September 2015, is responsible for monitoring the transformation of the sector by facilitating the implementation of the B-BBEE ICT Sector Code.
It is an independent body that operates under the Department of Communications and Digital Technologies (DCDT) and the Department of Trade, Industry and Competition (DTIC), which facilitates and is the final arbiter for EEIPs.
According to the council, the EEIP approval process involves evaluating the applications, followed by recommendations based on sector transformation priorities. The DCDT will then review the application alongside the council’s recommendation, and then the DTIC considers the final recommendation for approval.
Unlike traditional B-BBEE transactions that involve the sale of shares to black South Africans, an EEIP allows a “measured entity” to acquire ownership points through high-impact financial contributions into qualifying programmes, explains the ICT sector council.
Multinationals must provide proof that they have not entered any ownership partnership arrangements in other countries globally. EEIPs aim to promote investment in the development of SMMEs and broad-based participation in the economy. For example, Microsoft, Amazon Web Services, Samsung and several companies in the automotive industry have made EEIP commitments.
Despite this, concerns have been raised about the “slow pace” of transformation and weak progress of B-BBEE across the ICT sector.
Communications minister Solly Malatsi.
As firms like Elon Musk’s low-Earth orbit satellite internet constellation Starlink look to operate locally, EEIPs have come into sharp focus.
More recently, Dell Technologies’ EEIP renewal application for the 2025-2034 period has also drawn attention, with Parliament’s portfolio committee chairperson questioning DCDT minister Solly Malatsi’s recommendation to approve the deal, despite it being rejected by the ICT sector council in December.
Malatsi last year published a policy direction over extending EEIPs into the telecoms sector. The minister instructed the Independent Communications Authority of South Africa to recognise EEIPs as an alternative to a law that requires telecommunications network service providers to be 30% owned by historically disadvantaged groups.
In the updated EEIP framework, the council notes the National Development Plan (NDP) 2030 serves as South Africa’s primary socio-economic roadmap, identifying ICT as a “critical foundation” for a capable and developmental state.
Therefore, for an EEIP application to be legally and strategically defensible, it must articulate a clear “theory of change” that aligns its projected outcomes with the high-level goals of the NDP, it states.
