South Africa has modified its affirmative action regulations, allowing foreign-owned satellite internet providers, including Elon Musk‘s Starlink, to operate without the requirement of local black ownership. On March 29, 2024, the country’s communications minister, Solly Malatsi, announced a policy change that enables these companies to meet affirmative action criteria through investment in “equity equivalent” programs, such as skills training for historically disadvantaged groups.
This decision, published in a government gazette, represents a significant shift in South Africa’s approach to foreign investment in the communications sector. Previously, foreign companies were mandated to sell at least 30% of their local equity to black or other non-white owners as part of the country’s Broad-Based Black Economic Empowerment (BBBEE) initiative. Critics of this policy have argued that it serves as a barrier to foreign investment, impacting economic growth in a country still grappling with the legacy of apartheid.
Musk, who was born in South Africa, has publicly criticized the country’s ownership laws, describing them as “openly racist.” In a social media post earlier this year, he claimed that Starlink could not operate in South Africa due to these requirements, stating, “Starlink isn’t allowed to operate in South Africa because I’m not black.” His comments have drawn attention to the ongoing debate surrounding affirmative action in the country, which aims to address the inequalities established during apartheid.
The new policy directive not only applies to Starlink but also extends to other foreign-owned companies in South Africa. By allowing firms to invest in community development and skills training, the government aims to strike a balance between fostering foreign investment and supporting economic empowerment for previously disadvantaged communities.
Starlink, a subsidiary of SpaceX, has already established its presence in more than a dozen African countries, offering low-orbit satellite internet services. The company’s expansion into South Africa is expected to enhance high-speed internet access in rural and underserved areas, a critical need in a country where connectivity remains a challenge.
Minister Malatsi emphasized the potential benefits of Starlink’s technology for South Africa, stating that it could significantly accelerate internet access for communities that have historically been left behind. This move aligns with broader efforts to improve infrastructure and promote digital inclusion across the nation.
As the new policy takes effect, it remains to be seen how it will impact foreign investment in South Africa’s communications sector and whether it will lead to a more significant presence of international companies like Starlink in the region. The shift reflects the ongoing evolution of South Africa’s economic landscape, balancing the need for inclusivity with the demands of a globalized market.
