Elon Musk's influence? South Africa's digital policy amendment sparks debate

Communications and Digital Technologies Minister Solly Malatsi has been accused of siding with wealthy United States-based businessman Elon Musk by proposing an amendment that would weaken a black empowerment policy in the digital communication sector. 

The accusation followed Malatsi’s communique on Friday proposing an amendment to the government policy that required multinational companies to sell 30% or more of their stake to previously disadvantaged black people in South Africa.

Malatsi, who gazetted his proposal on May 23, wants the  Independent Communications Authority of South Africa (ICASA), which regulates the electronic communication space, to go easy on the multinational companies by implementing “certain amendments to regulations promulgated by it to meet the imperatives of other national laws”. 

“The focus of this policy direction is on lowering regulatory hurdles to investment in reliable broadband and ensuring access to the internet. 

“This is in line with the Broad-Based Black Economic Empowerment Codes of Good Practice, which recognise that the global nature of multinational corporations’ operations may constrain their ability to comply with equity ownership requirements,” read his proposal.

Interested people have been given 30 days from the date of the publication of the proposal to provide written comments for or against it.

Malatsi was yet to respond to questions sent to his spokesperson, Kwena Moloto, seeking a response on the allegations that this was done to appease Musk.  

The proposal came to light two days after President Cyril Ramaphosa met with US President Donald Trump at the White House on Wednesday. 

During a media briefing with international media before the two leaders held a private engagement, South African multibillionaire businessman Johann Rupert not only begged Trump to assist South Africa with technology to fight crime, but also proposed that Starlink, which is owned by Musk, come to South Africa. 

In the communique, Malatsi, who represents the DA in the ANC-led Cabinet, said the amendment of Section 9(2)(b) of the Electronic Communications Act, 2005, was necessary because multinational corporations were not keen on complying with equity ownership requirements.

“Consequently, there is a need to harmonise the requirements and provisions of the Act with other legislation that applies to the recognition of ownership of members of the ICT Sector, including the Amended Broad-Based Black Economic Empowerment (B-BBEE) ICT Sector Code.” 

It was reported that the government had previously rejected Musk’s attempt to launch Starlink’s branch in South Africa after he had refused to sell 30% or more of his shares to previously disadvantaged black people. 

It was also reported that Musk accused the government of refusing his move because he was not black. 

The proposal said multinational operators in the ICT industry have for a long time sought clarity on the equity equivalent investment programmes.

“This will provide the certainty necessary to attract increased investment in ICT and accelerate universal internet access,” it read.

It said the World Bank research showed that, on average, every 10% increase in broadband penetration results in 1.21% GDP growth in middle-income countries such as South Africa.

“Broadband access makes it easier for people to start businesses, grow businesses, seek employment, work remotely, and market goods and services. 

“Giving millions of South Africans access to broadband would, therefore, constitute one of the biggest empowerment programmes the South African government has ever undertaken,” read the document.

The Independent Communications Authority of South Africa (ICASA) was directed to urgently consider aligning the regulations “in respect of the Limitations of Control and Equity Ownership by Historically Disadvantaged Groups (HDG) and the Application of the ICT Sector Code, with the Amended Broad-Based Black Economic Empowerment (B-BBEE) ICT Sector Code.”

EFF accused Malatsi of proposing to bring Starlink into the country through the backdoor. 

“This policy direction is unconstitutional and driven by external pressure, particularly from Elon Musk, a close ally of Donald Trump. 

“This policy is tailor-made to allow Starlink access to operate in South Africa without meeting the mandatory 30% local ownership requirement as per the Electronic Communications Act. 

“Musk has arrogantly refused to comply with our sovereign laws, and the ANC-led government has chosen to kneel,” read the EFF statement.

Political analyst Thabani Khumalo said Malatsi’s proposal could be good for accelerating the expansion of the country’s communication network, and bad for interfering with the country’s transformation policies.

“Remember, the country has been criticised over the years by investors for its policy uncertainty. 

“So, if you bend a particular policy to please a particular company, then you are seen to be practising a policy uncertainty,” said Khumalo.

He said those who perceive that this decision was taken to impress Musk would be justified. 

“If it is done within that context, nobody can trust this government to implement its policies consistently.

“This should be managed in a way that would give clarity to all sectors involved,” said Khumalo. 

Umkhonto weSizwe Party (MKP) national spokesperson, Nhlamulo Ndhlela, described the proposal as a dangerous precedent for future state capture by foreign corporations, saying this was done to help “foreign tech oligarchs - chief among them, Elon Musk’s Starlink” to bypass transformative procurement frameworks and “fast-track backdoor deals with foreign”.

“This is not just about Starlink, but it opens the door to a deregulated, surveillance-prone digital future controlled by foreign actors,” he said. 

However, University of KwaZulu-Natal political analyst Zakhele Ndlovu said, fearing that foreign-sourced technology might make it easy for foreign governments to spy on South Africa, was not an issue. 

“Because America is already spying on us anyway, so I don’t think that we should be too worried about that. 

“It looks like Rupert has a lot of influence,” said Ndlovu.  

The DA was fully behind the proposal, which it said had nothing to do with Starlink and Rupert recommending Starlink at the White House, but ICASA has been working on it for months. 

“ICASA is an independent entity of the government. As the DA, we have full faith that the amendments are in line with market research. It took ICASA months of work to produce this document. 

“Linking the proposed policy direction to Starlink speaks to a narrow view on the independence of ICASA,” said DA’s spokesperson on communication, Sholofelo Motshidi-Bodlani.

In rejecting the proposal, the ANC Youth League said: “This proposal represents a clear step backwards in our nation's ongoing struggle to dismantle apartheid-era economic structures. 

“The very purpose of B-BBEE is to ensure that the historically excluded black majority are not relegated to being ordinary consumers of foreign technology, but are instead positioned as key producers, owners, and innovators in the economy.” 

bongani.hans@inl.co.za