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Communications Minister Solly Malatsi has recommended approval of Dell’s Equity Equivalent Investment Programme (EEIP) application, a decision that could reshape foreign investment rules in South Africa’s telecommunications sector. The move aligns with Malatsi’s broader push to have EEIPs recognised as an alternative to the longstanding requirement that telecom licensees be 30% owned by historically disadvantaged groups (HDGs).
Dell’s EEIP application has been under review for ten years. The Department of Communications and Digital Technologies (DCDT) said the proposed investment exceeds R230 million directly into the local economy.
“Dell’s proposed EEIP investment exceeds R230 million directly into the local economy, with its value extending far beyond funding opportunities for SMMEs and young people,” the department said.
The value also lies in providing access to capital, growth support, AI-powered tools, and integration into supply chains as supplier-ready enterprises.
EEIPs offer a legally recognised pathway for foreign companies that do not have local shareholding. Instead of selling equity to HDG partners, firms commit to measurable empowerment outcomes – including enterprise development, job creation, and doing business with SMMEs.
“EEIPs are a legally recognised pathway for investment in South Africa for companies who do not have local shareholding,” the DCDT said.
The department added that EEIPs ensure inclusion by enabling foreign firms to invest while committing to broader empowerment goals through measurable outcomes.
The policy direction has not gone unchallenged. The African National Congress (ANC) slammed the move, claiming Malatsi exceeded his authority.
“It mirrors a troubling trend where ministers belonging to the Democratic Alliance seek to bypass government,” the ANC said. “The ANC stresses that no minister may amend or suspend legislation via a policy directive.”
The party also raised questions about public participation, noting that Malatsi claimed 90% of 19,000 submissions supported the policy direction. The ANC asked how submissions were counted, whether they were verified, and whether they genuinely reflect broad public support.
The debate carries high stakes for foreign investment. Starlink, owned by Elon Musk’s SpaceX, has been unwilling to launch in South Africa due to the 30% HDG ownership requirement. However, it fully supports EEIPs as an alternative.
The ANC warned that enabling EEIPs would allow “certain operators, notably foreign satellite operators like Starlink, to bypass core transformation obligations”.
Starlink has proposed providing free hardware and subscriptions to 5,000 rural schools in perpetuity as part of its EEIP, valued at R500 million.
“Starlink’s proposed EEIP would connect 5,000 rural schools with free high-speed internet in perpetuity, supported by solar power, devices, software, and long-term monitoring,” Starlink said. “This is significantly more impactful than equity divestment, which often benefits only a small number of individuals.”
Malatsi has issued a policy directive instructing Icasa, the communications regulator, to amend its equity ownership rules. The department said full recognition of EEIPs aligns with the Government of National Unity’s Medium Term Development Programme and would support foreign direct investment.
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