South Africa ready to bend local BEE rules for Starlink as strategic talks with Musk holds today

South African authorities are planning to offer Elon Musk’s Starlink a workaround of the local Black Economic Empowerment (BEE) rule, in a move to shift grounds for the satellite internet service provider to operate in the country. According to reports, the offer will come at a last-minute meeting slated for Tuesday night between Elon Musk, or his representatives, and a South African delegation travelling with President Cyril Ramaphosa.

The development comes amid famous claims by Musk and Trump that South Africa bears an anti-white racism push, which is exploited through the BEE rule. Elon Musk has made rounds on X where he complained that Starlink has been denied regulatory approval in South Africa because he’s not black. The post has immediately drawn reactions from X users, where Clayson Monyela, South Africa’s head of public diplomacy, branded it as “not true” and “nothing to do with your skin colour”.

Musk, in an X post, cited that “Starlink is not allowed to operate in South Africa, because I’m not black”. 

The strategic meeting, to be held before Ramaphosa visits the White House on Wednesday, aims to ease tensions with both the billionaire and US President Donald Trump.

Reports noted that Starlink would be offered a waiver on the 30 per cent black economic empowerment, which would now stand firm on all ICT companies, including those from China and the Middle East. 

In response, the South African Department of Communications and Digital Technologies said the new rules for ICT companies aren’t about providing access to a single company, but rather part of a broader strategy to create an enabling environment for international investment and expand digital connectivity across South Africa. 

Instead, Starlink would be offered an “equity equivalence” option that involves investments in infrastructure or training, or providing Starlink kits to rural areas in order to help improve internet access. 

If the deal scales through, Starlink will not be the first to enjoy such a benefit, as vehicle manufacturing companies such as BMW, Ford, and Toyota signed up for a similar workaround in 2019, which involves setting up a fund to invest in bringing disenfranchised groups into the sector.

Also Read: Starlink beats local ISPs in sub-Saharan Africa, but is it widening the digital divide?

Starlink vs BEE rule in South Africa

Despite its continued availability, which has brought its presence in Africa to 21, Starlink has encountered challenges launching in South Africa. Though the satellite provider claimed that it had set up a legal entity in South Africa for its launch.

South Africa’s Electronic Communications Act (ECA) and BEE rule states that historically disadvantaged groups must hold at least 30 per cent equity in any potential licensee in South Africa’s telecommunications, broadcasting, or postal sectors. This condition has challenged Starlink’s intended launch in South Africa. 

To circumvent the act, Starlink’s parent company, SpaceX, wrote to telecommunications regulator ICASA that local shareholding laws were a significant barrier and that it should rethink the 30 per cent ownership requirement for licensees by introducing equity equivalent programmes in these regions as an alternative.

The satellite company suggested setting aside an equity equivalent to the ownership programme to assist South Africans. It offered to install 8,000 satellite kits in rural schools across the country. 

As several moves were made by Starlink to bypass this rule, Communications Minister Solly Malatsi was recently faulted for trying to cut corners for the satellite company. In an interview, the Minister said he would like to see equity equivalence programmes made an option to encourage foreign investment in South Africa’s ICT sector. Malatsi noted that it is working on a regulatory and licensing framework for satellite internet providers to play as operators. 

The Chairperson of the Portfolio Committee on Communications and Digital Technologies, Khusela Sangoni Diko, noted the minister was seeking to “erode hard-won transformation goals” by his moves to bypass the Act.

“It appears these proposed directives and regulations are an attempt to undermine empowerment legislation by stealth and, should this be found to be the case, they will be fiercely opposed,” Diko stated in February.

While this stalls, Starlink’s offerings have been tagged as a potential solution to South Africa’s unreliable internet access. 

The company’s technology, which relies on a constellation of low-Earth orbit satellites, would be a potential game-changer for South African users who’ve historically faced expensive or unreliable internet options. According to a 2023 survey compiled by Statistics South Africa, only 1.7 per cent of rural households have access to the internet.

While renewed hope kindles for Starlink, which has for months tried to circumvent South Africa’s local laws, the planned strategic meeting further raises questions on how firm African countries can be with domestic laws, especially when it comes to dealing with the West.