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No. 37261
GOVERNMENT GAZETTE, 24 JANUARY 2014
Chapter 10: Promoting investment in the ICT Sector
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10.1 Introduction
For government, investment in the ICT sector is a fundamental policy goal, alongside
transformation, diversity, universal access, and empowerment of historically disadvantaged
individuals. In order to ensure a sustainable Investment environment, it is critical for
government to create an enabling policy environment. This includes establishing proper
investment policy and regulations, building research and development capacity, and
promoting innovation.
According to the Global Competitiveness Report 2012-2013, the five greatest obstacles to
doing business in South Africa are: i) an inadequately educated labour force; ii) restrictive
labour regulations; iii) inefficient government bureaucracy; iv) inadequate supply of
infrastructure; and v) corruption. The same report ranks South Africa 113th out of 144
countries in labour market efficiency.
10.2 Policy and Regulatory Framework
One of the key objectives of the Telecommunications Act of 1996 (repealed in 2006) was to
encourage investment and innovation in the telecommunications sector. There have been
many advances made in terms of the development of this sector particularly on the
investment in infrastructure. But it has also been fraught with challenges.
The state of investment in the broadcasting industry is highly regulated in terms of limits set
(both for local and foreign) and the licensing process for such services, together with the
managed liberalisation. These limits were set in 1993 and they have not been revised, in
spite of attempts to do so by the regulator. The infrastructure licence for broadcasting
services is issued only after the Minister of Communications has issued specific policy
directives.
While attempts have been made to integrate postal services into mainstream regulation as
part of convergence, demonstrated by the transfer of the Postal Regulator into ICASA in
2005, the postal sector is still governed by the Postal Services Act of 1998. The postal
market is divided into two, namely the reserved and unreserved markets. As mentioned
earlier, only the national operator, SAPO exclusively operates in the reserved market. The
unreserved market is easy to enter as no application is required. A licence is issued upon
completing a prescribed registration and payment of a R500 registration fee. There are no
specific clauses in legislation, licence conditions or regulations addressing sector-specific
targets or mechanisms.
10.2.1 Infrastructure Investment
The past 20 years have seen the ownership of telecommunications service entities
transforming into a major industry sector that offers considerable investment opportunities to
private investors both domestically and internationally. BMI-T has calculated that the
cumulative CAPEX since 1993 has been R132,4bn in mobile and R101.8bn in fixed
networks.
There are several notable examples of foreign direct investment in the telecommunications
networks in South Africa. These include the UK's Vodafone's investment in Vodacom, India's
Tata's investment in Neotel, Japan's NTT's investment in Dimension Data, and the
continued investment by Saudi Oger in Cell C. The regional and international investment in
the SEACOM, EASSY and WACS submarine cables has benefitted the local economy.
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