Prominent technology investor Stafford Masie has launched a stinging public critique of South Africa’s draft National Artificial Intelligence Policy, warning that the document risks “regulating away” the conditions needed for the country to participate in the global AI economy.
In an open letter to communications minister Solly Malatsi, published by TechCentral on Thursday, Masie argued that the draft policy is fundamentally misordered – proposing seven new governance bodies before government has committed a single rand to compute infrastructure or addressed the basic question of where the electricity to power AI workloads will come from.
“You cannot govern what you have not built,” Masie wrote. “The correct sequence, demonstrated by every country that has successfully attracted AI investment, is infrastructure and incentives first, governance second.”
Masie, who has angel-invested in multiple South African AI start-ups and advises enterprises on AI strategy, said he was writing in his personal capacity.
TechCentral reported that the draft policy, gazetted earlier this month, proposes establishing a National AI Commission, an AI Ethics Board, an AI Regulatory Authority, an AI Ombudsperson Office, an AI Insurance Superfund, a National AI Safety Institute and an Integrated AI-Powered Monitoring Centre. Public comment closes on 10 June.
Masie argued in the letter to Malatsi that AI policy should be treated as a national security matter rather than a governance exercise, citing South Africa’s 0.67 Gini coefficient, youth unemployment above 57% and an expanded unemployment rate of between 42% and 45%.
Mass displacement
He warned that AI-driven automation is already eliminating jobs globally in the sectors that employ South Africa’s most vulnerable workers – retail, financial services, logistics, basic manufacturing and call centres – and that reskilling programmes alone are an inadequate response.
“In a society already this unequal, mass displacement of low- and mid-skilled workers without a corresponding AI-driven job creation engine is not an economic adjustment. It is a social detonation,” he wrote.
Read: South Africa’s AI moment is now – and we risk blowing it
A distinctive argument in the letter concerns electricity. Masie said South Africa’s current energy position – more than 300 consecutive days without load shedding, peak demand of around 26.5GW against available capacity regularly exceeding 28GW, and nearly 4GW held in cold reserve – represents a time-limited opportunity that the draft policy fails to grasp.
He pointed to global hyperscaler capital expenditure of more than US$650-billion this year on AI infrastructure, and said between 30% and 50% of US data centres planned for 2026 face delays or cancellation, primarily because of grid constraints.
“South Africa could absorb a meaningful share of that displaced demand, if we act now,” Masie wrote, but added that the regulatory and energy environment currently makes it easier to build a 50MW AI compute facility elsewhere.
Masie was equally critical of the draft’s incentive architecture, which he described as conceptually present but operationally empty. The policy references tax breaks, grants and an “AI Innovation Fund” without specifying R&D tax credit schedules, special economic zone provisions for AI clusters or compute credit programmes.
He said exchange controls continue to treat outward investment as suspicious and that South Africa’s venture capital market remains shallow because government has created no instruments to de-risk early-stage AI investment.
On talent, Masie cited estimates that more than 70 skilled South Africans leave the country every day and that 38% of African developers already work for at least one foreign company. He called this a “retention emergency” rather than a future workforce development problem.
Masie proposed replacing the seven institutions proposed in the draft with a single National AI Office reporting directly to the minister.
His other recommendations include declaring AI infrastructure a national strategic priority, publishing a data centre energy allocation framework within 12 months, tabling a draft AI investment incentive regulation, launching an emergency talent retention programme, making open-source AI a strategic pillar and committing to quantified targets.
“South Africa will not regulate its way into the AI economy,” Masie wrote. “It must build its way into it.” — (c) 2026 NewsCentral Media
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