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South Africa is making significant changes to its legislation in order to accommodate Elon Musk’s conditions for offering his Starlink satellite internet service in his birth country. This comes after the billionaire refused to comply with Black empowerment laws that he deemed “openly racist.”
In response to Musk’s concerns, the South African government is proposing a new approach to affirmative action laws that currently require foreign investors in the telecom sector to sell 30% of equity in their local entity to historically disadvantaged groups in order to qualify for operating licenses. The proposed change, put forth by communications minister Solly Malatsi, suggests that companies could instead participate in “equity equivalence programs.” These programs could include initiatives such as sourcing from local suppliers, creating jobs, or supporting small businesses. The proposal is set to be open for public comment for a period of 30 days.
While the government maintains that the proposed change will not exempt companies from their transformation obligations, it aims to provide a more flexible approach for companies to contribute meaningfully to equity, skills development, and economic inclusion in the country. Malatsi emphasized that the new requirements are intended to attract investment into the sector and provide much-needed policy certainty.
Elon Musk, who has been vocal about his struggles with the current regulations, has not formally applied for a license for Starlink in South Africa. He has expressed frustration at being unable to operate in his birth country due to his race. In contrast, other international telecom operators in the country, such as Vodacom, have complied with existing rules by selling shares to Black investors.
Black empowerment policies in South Africa have been a longstanding initiative to address racial inequalities stemming from apartheid. The proportion of Black-owned businesses in the country has increased to 60% by 2022, doubling since 2019. However, critics argue that the requirements are often exploited and benefit only a select few, while deterring foreign investment.
The proposal to introduce equity equivalence programs in the telecom sector has garnered mixed reactions. While some analysts praise the move for its potential to benefit rural communities and expand broadband connectivity, others criticize the government for bending the rules to accommodate Musk’s demands.
In neighboring Lesotho, Starlink was recently granted a 10-year operating license, highlighting the growing demand for alternative internet solutions in the region. Starlink has proven popular in other African countries with limited traditional broadband access, with politicians advocating for its potential to support education, health, and social services in underserved areas.
As the debate continues, it remains to be seen how the proposed changes to South Africa’s legislation will impact the telecom sector and foreign investment in the country. The government’s efforts to strike a balance between promoting economic inclusion and attracting innovative technologies like Starlink reflect the complex challenges facing the nation in the digital age.
