South Africa faces backlash over plan to change law for Musk’s Starlink

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South African opposition parties have accused the government of making a “backdoor deal” with Elon Musk after it proposed to loosen Black empowerment laws to meet the US billionaire’s conditions for his Starlink telecoms group to enter the country.

The opposition Build One South Africa (Bosa) party said it had written to the speaker of parliament this week asking for a “public record of decision in this matter, so as to assure the people of South Africa that this was not a backdoor deal”.

“The message being sent is that if you are a powerful foreign billionaire, you can sidestep South Africa’s laws, while our local businesses are forced to jump through hoops,” said Bosa deputy leader Nobuntu Hlazo-Webster.

Roger Solomons, spokesperson for the party, said the newly gazetted carve-out for telecoms companies was an “impulsive move” enabling Starlink to enter the South African market “under conditions favourable to them, and not the country”.

Julius Malema, leader of the radical leftwing Economic Freedom Fighters, a main opposition party, said he would “oppose Starlink in parliament” rather than be “dictated to by business”.

The backlash comes after communications minister Solly Malatsi proposed new laws last week that could exempt telecoms companies from requirements to sell 30 per cent of equity in their local entity to historically disadvantaged groups to qualify for operating licences.

Instead, companies could invest in “equity equivalence programmes” such as signing up local suppliers, creating a certain number of jobs, or financing small businesses. 

The workaround is widely seen as opening the door for Musk, who has said he would not comply with Black Economic Empowerment (BEE) regulations and complained he could not “get a licence to operate in South Africa because I am not Black”. 

Other international telecoms operators in the country, such as Vodafone’s local unit Vodacom, have sold shares in local subsidiaries to Black investors to comply with existing rules.

The long-ruling African National Congress has made affirmative action laws its policy touchstone, aiming to redress apartheid rules that for decades shut out the Black majority from economic opportunities.

But critics say the regulations are often a box-ticking exercise that has only benefited a new Black elite class, while deterring investment.

The loosening of Black ownership requirements in telecoms has also increased calls for similar exemptions in mining. The Minerals Council South Africa, the main mining body, said exploration companies should be excluded from Black ownership requirements under a proposed mining bill.

The bill as it stands proposes enshrining into law a requirement, which already exists in a sectoral charter, that 30 per cent of a group’s shares be held by Black South Africans.

“Prospecting . . . [is] extremely high risk. There’s no guarantee they’re going to find something that’s economically viable,” said Allan Seccombe, communications director at the Minerals Council.

“Every cent that they raise should ideally go towards drilling out or finding a resource.” 

The Democratic Alliance, the second biggest party in the governing coalition, is taking the ANC to court over its BEE ownership laws, which it says are unconstitutional.

Among other issues, proposed Black ownership requirements in the draft mining bill “will effectively end the already tottering case for foreign investment in South African mining,” James Lorimer, an MP for the DA, said on Friday.

“The bill seeks to double down on racial transformation and brings back a legion of bad ideas.”

President Cyril Ramaphosa has repeatedly dismissed the idea that BEE laws should be scrapped or reformed.

“I find it very worrying that we continue to have this notion that BEE is the one that’s holding our economy back,” he said in parliament this week.

“It is the partial and exclusive ownership of the means of production in our country that is holding this economy from growing.”

The ANC formed a 10-party coalition after suffering its worst electoral results last year, losing its majority for the first time since the country became a democracy amid frustration at high crime rates, unemployment and a cost of living crisis.