President Cyril Ramaphosa has expressed his support for extending the use of the Equity Equivalent Investment Programme (EEIP) to the broadband telecommunications sector as proposed in a draft direction published by Communications and Digital Technologies Minister Solly Malatsi.

While making no specific reference to the controversial draft direction, which is currently out for public comment, Ramaphosa told members of the National Council of Provinces that the EEIP was consistent with South African law and government’s commitment to economic transformation and black empowerment.

He also stressed that the proposal to extend the EEIP to the telecommunications sector was not specifically designed to support the entry of Elon Musk’s Starlink, which is operated by SpaceX, and which opposes the prevailing Electronic Communication Act’s requirement for licensed telecoms firms to have 30% black equity ownership.

Ramaphosa was responding to an initial question by the Democratic Alliance’s Nicolaas Pienaar as to whether, following his visit to the US that included an uncomfortable Oval Office meeting with US President Donald Trump, Ramaphosa had concluded that the broad-based black economic empowerment policy needed to be reworked, as well as supplementary questions that made specific reference to Starlink and the legality of extending the EEIP as proposed.

Describing the EEIP as a “innovative way” for multinationals to invest in South Africa and meet their transformation commitments without selling any direct equity, Ramaphosa said Malatsi’s proposal was “very much in line with our laws”.

“There is no violation as far as he is concerned and as far as I am concerned.”

However, Ramaphosa also indicated that public hearings would be held before any changes were introduced.

This, amid strong objections by several political parties to the direction Gazetted by Malatsi on May 23, for a 30-day comment period.

Opponents suggest that the introduction of the EEIP in the sector would dilute empowerment, prejudice incumbent operators and undermine the Independent Communications Authority of South Africa.

A number of lawmakers have also expressed a preference that Malatsi pursue a legislative amendment rather than a policy intervention by way of a Ministerial direction.

Ramaphosa, meanwhile, argued that government was ready to be innovative in its pursuit of transformation, while describing the principle of transformation as “not negotiable”.

He also indicated that extending the EEIP scheme to telecoms licensees would be a case of synchronising the communications law with other laws, given that multinationals in other sectors, including the information and communication technology and automotive sectors, were already implementing EEIP programmes.