South Africa’s communications minister, Solly Malatsi, announced a significant policy change on March 15, 2024, permitting foreign-owned satellite internet providers, including Elon Musk’s Starlink, to operate without the obligation to sell 30% of their local equity to Black or other non-white owners. This alteration aims to foster a more welcoming environment for foreign investment in the country’s communications sector.
The new regulations, published in a government gazette, allow these companies to meet affirmative action requirements through alternative measures. Instead of direct equity transfer, firms can invest in “equity equivalent” programs. This includes initiatives focused on skills training and supporting previously disadvantaged groups within the nation. This approach is not exclusive to the communications sector; it extends to various industries in South Africa as well.
Musk, who was born in South Africa, has previously criticized the country’s ownership laws, labeling them as “openly racist.” He claimed that Starlink faced operational restrictions due to these laws, stating on social media that the service was barred from operating in South Africa “because I’m not black.” His remarks echo sentiments expressed by former U.S. President Donald Trump, who has also criticized South Africa’s affirmative action policies as discriminatory against white individuals.
South Africa’s affirmative action framework, known as Broad-Based Black Economic Empowerment, is designed to address the inequalities stemming from the apartheid era, which enforced a system of white minority rule. While the policy aims to promote economic inclusion, critics argue that it deters foreign investment, which is essential for economic growth.
Starlink, a subsidiary of SpaceX, already provides low-orbit satellite internet services in more than a dozen African nations, with most of South Africa’s neighboring countries included in its coverage. The company aims to enhance internet access in rural and underserved communities, a goal that aligns with South Africa’s broader objectives of improving digital connectivity throughout the nation.
Minister Malatsi expressed optimism that Starlink’s involvement could significantly accelerate high-speed internet access, particularly in areas that have been historically marginalized. This policy shift represents a potential turning point in South Africa’s approach to foreign investment and affirmative action, as the government seeks to balance economic growth with social justice initiatives.
The decision has the potential to reshape the landscape for international tech companies looking to enter the South African market, inviting further discussions on how to effectively support economic empowerment while encouraging foreign partnerships.
