Malatsi’s pragmatic step welcomed, but bigger strides needed to unlock growth – IRR

Minister of Communications and Digital Technologies Solly Malatsi’s decision to direct the Independent Communications Authority of South Africa (ICASA) to “urgently consider” regulatory changes in the telecoms sector – especially regarding race-based barriers to investment such as BEE – is a welcome step towards shifting South Africa to a pro-growth footing.  

Redirecting obligations toward equity-equivalence replaces compulsory share transfers with skills and supplier-development options, signalling a modest shift away from traditional BEE. Nonetheless, because success is still measured against racial targets, racial preferencing, verification burdens, and policy uncertainty remain.

Equity-equivalence is thus an improvement, but not a breakthrough. More will be needed to achieve a fully non-racial, pro-growth regulatory framework if South Africa is to unlock the scale of investment and job creation needed.

Over recent months, the IRR has sought to impress on the public, parliamentarians and policymakers in government, Minister Malatsi among them, the scale of the impediments to economic growth created by race-based policies like BEE. In these extensive engagements, the IRR has highlighted the cost of BEE to investment, job creation, and socio-economic upliftment, particularly of the poorest.

Says Hermann Pretorius, IRR head of strategic communications: “With IRR polling data published this week once again indicating the primacy of job creation as the national priority, it is clear that South Africans deserve pro-growth pragmatism from their government. Our polling also shows a notable lack of support for race-based policies across the board. Minister Malatsi therefore deserves credit for taking seriously the public’s desire for pro-growth, pro-investment, pro-jobs government decisions.”

As illustrated in the IRR’s flagship Blueprint for Growth papers, BEE policies have been intensely harmful to ordinary South Africans of all backgrounds.

While introduced and championed as a tool for redress, BEE has largely benefited a politically connected elite, notably sidelining the majority of poor black South Africans. This has contributed to increasing intra-racial inequality and entrenched a system of racial preferencing that is not only economically burdensome but constitutionally contentious. The policy’s inefficacy is underscored by persistently high unemployment and sluggish investment, both of which are vital to uplifting economic growth.

Says Pretorius: “Minister Malatsi’s decision is a welcome and pragmatic step in the right direction. Yet, there is still farther to go if we are to remove all barriers to growth. Whether through sweeping actions, like the adoption of the IRR’s No More Race Laws Bill, or through cautious yet necessary steps, South Africans understand that the key to unleashing a rising tide of job creation is an investment-friendly, growing economy.

“To achieve this urgent national ambition, many more decisions that put delivery and jobs above long-entrenched ideology will be necessary. Each one will be welcomed not only by the IRR, but by countless South Africans who seek honest work for honest pay – the dignity of being able to care for themselves and for loved ones. That, in the end, is what all talk about economic policy, investment, and job creation is about.”

Media contact: Hermann Pretorius IRR Head of Strategic Communications Tel: 079 875 4290 Email: hermann@irr.org.za

Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za