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The ongoing dispute involving Elon Musk and Starlink concerning the company’s inability to launch services in South Africa is deeply intertwined with the nation’s black empowerment policies. This situation may also play a role in heightened tensions between the United States and South Africa, the continent’s most industrialized nation.
In a provocative statement to his more than 219 million followers on the social media platform X, Musk suggested that Starlink’s inability to operate in South Africa is due to his race, saying it was “not allowed to operate in South Africa simply because I’m not black.” However, the Independent Communications Authority of South Africa (Icasa), which regulates the telecommunications sector, clarified that Starlink has not even submitted an application for the necessary licensing.
The South African foreign ministry has indicated that Starlink is welcome to do business in the country as long as it complies with local regulations.
Legal Challenges for Starlink
To legally operate in South Africa, Starlink must obtain various licenses, including network and service licenses, which mandate that 30% of the ownership be held by historically disadvantaged groups. This requirement is aimed primarily at addressing the economic disparities faced by the black majority population, who were systematically excluded from economic participation during the apartheid era.
Since the end of apartheid in 1994 and the rise of Nelson Mandela’s African National Congress (ANC) to power, the ANC has prioritized black empowerment as a cornerstone of its economic policy. The legislation requiring a minimum stake for local black firms has been a point of contention for international investors. Musk, who was born in South Africa and later moved to Canada and the U.S., perceives this ownership requirement as a significant barrier to Starlink’s entry into the South African market.
In a formal submission to Icasa, Starlink expressed concerns that these black empowerment laws effectively restrict many foreign satellite operators, including itself, from entering the South African market, according to the local media outlet TechCentral.
In response, foreign ministry spokesperson Clayson Monyela pointed out that over 600 American companies, including major players like Microsoft, successfully operate within South Africa’s regulatory framework.
Efforts to Resolve the Stalemate
There is potential support for Musk’s Starlink from South Africa’s Communications Minister, Solly Malatsi, a member of the opposition Democratic Alliance (DA). The DA has been vocal against the current black empowerment laws, arguing that they contribute to corruption and nepotism, forcing investors to partner with businesses close to the ANC to gain contracts or operate successfully.
In a statement last October, Malatsi hinted at exploring options to bypass the 30% black equity requirement, indicating a desire to introduce a “policy direction” to Icasa that would clarify the use of equity equivalent programs. This could mean that Starlink might not need a black business partner, provided it invests in social initiatives benefiting the local black community.
However, nearly six months later, no changes have been made to the policies, and a spokesperson from Malatsi’s department informed the BBC that legal scrutiny of the matter is still underway. It seems that Malatsi might be encountering resistance from ANC lawmakers who emphasize the necessity of compliance with transformation mandates within the tech industry.
Khusela Diko, chairperson of the parliamentary communications committee, recently reiterated that “transformation” in the tech space remains essential, opposing any special consideration for Musk’s venture. She firmly stated that legal compliance is non-negotiable and shortcuts will not be tolerated.
Strained Diplomatic Relations
The controversy surrounding Musk and Starlink is symptomatic of broader tensions between the U.S. and South Africa, especially during and after Donald Trump’s presidency. Musk, often ally in political circles, has voiced strong opposition to South Africa’s empowerment laws, labeling them as “racist.” Meanwhile, Trump has criticized the South African government’s handling of land ownership issues, even threatening to boycott the upcoming G20 summit in South Africa due to what he claims is a lack of justice for white farmers.
Despite Musk’s assertive rhetoric, the South African government, through discussions between President Cyril Ramaphosa and Musk in New York last year, seemed optimistic about potential collaboration that could benefit both parties. However, that optimism appears to have waned as Musk continues to adopt a combative stance toward South Africa’s regulatory landscape.
Starlink’s Challenges in Other African Nations
Starlink recently received a ten-year operating license from Lesotho amid pressures from the Trump administration, which previously threatened tariffs that could impact thousands of jobs in the country. Reports suggest the swift approval of regulatory clearance may have been influenced by these external pressures, though officials in Lesotho denied any direct connection between tariff negotiations and the licensing decision.
Starlink’s move into Lesotho reflects broader trends in the region regarding the demand for local partnerships, as many nations scrutinize foreign ownership, particularly in sectors like telecommunications. In Namibia, Starlink is seeking exemptions from local partnership requirements, which demand 51% ownership of firms by local entities.
Starlink’s Broader Presence on the Continent
Despite the roadblocks in South Africa, Starlink operates in over 20 African countries, including Somalia, which awarded the company a ten-year license. The service is positioned to revolutionize internet connectivity, particularly in remote or underserved regions, by utilizing a satellite-based network that delivers faster speeds than traditional cable systems.
Nigeria was the first country in Africa to facilitate Starlink’s operations, becoming the second-largest internet service provider in the nation. Despite these successes, South Africa remains a significant gap in the company’s portfolio, as a substantial portion of the local population lacks internet access, particularly in rural areas.
The current state of access presents an opportunity for a collaboration between the South African government and Starlink that might prove mutually beneficial, as the government aims to achieve universal internet coverage by 2030.
In an attempt to mend relations with the U.S., Ramaphosa appointed former deputy finance minister Mcebisi Jonas as a special envoy. However, Jonas faces skepticism from right-wing factions due to his past derogatory remarks towards Trump. His recent commitment to repairing bilateral relations underscores the importance of U.S.-South African collaboration for both economic stability and international diplomatic relations.
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