Musk's Starlink stalls in South Africa over equity laws

JOHANNESBERG - South African-born billionaire Elon Musk has taken to his social media platform X to criticise his country of birth more than once, targeting a land law and now internet licensing requirements that aim to tackle post-apartheid inequality.

Part of a U.S. administration that has dismantled diversity, equity and inclusion (DEI) policies, Musk appears irked by similar policies in South Africa. The world's richest man last month accused his birth nation of having "racist ownership laws" over recent land reform legislation.  

He claimed on Friday his satellite internet service Starlink is not able to operate there because he is "not black."

Many South Africans believe President Donald Trump's decision to cut funding to South Africa is influenced by Musk's views. 

President Cyril Ramaphosa said his country "will not be bullied" soon after Trump's decree to halt aid. Will he be steadfast when it comes to granting Starlink a licence?

What is South Africa's DEI equivalent, and has it worked? 

Broad-Based Black Economic Empowerment(B-BBEE) is a government policy enacted in 2003 to boost economic equality in post-apartheid South Africa. 

It promotes the inclusion of more Black South Africans in the economy through ownership quotas, skills development, tax breaks and preferential procurement of goods and services.

Some critics have said that while the policy works in theory, in practice it has become a box-ticking exercise for many companies and has been abused by corrupt businesses and politicians, benefiting an elite few while deterring foreign investment due to its cumbersome requirements.

A 2021 analysis by the Trade & Industrial Policy Strategies research institute showed that Black-owned businesses rose from 40% in 2002 to 60% in 2019. After COVID-19, that figure dropped below 30%, the B-BBEE Commission has said.

Three decades since the end of apartheid, South Africa still struggles with a 32% unemployment rate and is considered the most unequal country in the world, according to the World Bank. 

What does B-BBEE have to do with Starlink?

Starlink, which is owned by Musk's SpaceX, operates in more than a dozen African countries but has hit regulatory hurdles in South Africa.

To comply with B-BBEE, at least 30% of Space X's South African operations would have to be sold or donated to stakeholders from historically disadvantaged groups, because it is an international company - not because of Musk's race.

In February, SpaceX withdrew from hearings with the Independent Communications Authority of South Africa (ICASA) that looked into a potential new licensing framework for satellite services. 

Last year, SpaceX urged ICASA to reconsider the ownership requirements. The Texas-based company has not officially applied for a license to operate in South Africa.

Multinationals in specific sectors can already invest in social projects such as skills training and small businesses, as B-BBEE equity equivalents, according to the Department of Trade, Industry and Competition.

Communications Minister Solly Malatsi told Context he issued a policy directive that would also give telecommunications companies the option of "equity equivalent" programmes.

If approved, international satellite internet services could invest in social programmes and operate in South Africa without selling 30% of equity.

Does South Africa need Starlink?

South Africa's internet penetration rate of 75% is higher than the rest of the continent. But there is still a divide between cities and rural areas, according to Freedom House, a U.S. human rights non-profit organisation. 

A recent government survey showed only 1.7% of rural households had a internet connection in 2023, compared with 12% in urban areas.

Some consumers hope Starlink will lead to lower internet costs and better connectivity for all South Africans.

Others worry that Starlink might give Musk control over the flow of information. They point to the satellite's role in Ukraine as an example. 

U.S. negotiators recently raised the possibility of cutting Ukraine's access to Starlink to pressure President Volodymyr Zelenskiy into handing over critical mineral resources.

Other South Africans are frustrated that B-BBEE policies might be relaxed for Musk, who they believe has presented a warped image of their country and its ownership laws to Trump.

Critics of B-BBEE say bypassing the licensing requirements may allow Musk to connect disadvantaged communities.

Starlink has already been used, albeit illegally, across the country to connect cancer-screening services, rural schools and anti-poaching surveillance cameras.

(Reporting by Kim Harrisberg; Editing by Ayla Jean Yackley)