Starlink raises questions about necessity and relevance of BEE laws
The licensing of Elon Musk's Starlink has sparked debate about whether South Africa's black economic empowerment laws are an impediment to growth or path to an inclusive economy
The South African government may have said that black economic empowerment is not negotiable, but Starlink's battle to enter the market has brought into play the influence of international trade.
During a Q&A session in parliament last week President Cyril Ramaphosa said his administration is seeking to create an inclusive economy making broad-based clack economic empowerment (broad-based BEE) legislation critical.
Ramaphosa was asked a barrage of questions about racial categories by members of the National Assembly on Tuesday and whether he was willing to do away with BEE laws.
Starlink's efforts to set up shop changed in February shortly after US President Donald Trump was inaugurated into office and the company withdrew from licensing hearings.
Instead the company argued in submissions that its global policy does not allow local ownership.
Democratic Alliance (DA) member George Michalakis asked Ramaphosa whether he would do a cross-departmental review of legislation that stifles investment and limits growth at 1%.
This came after Minister of Communication and Digital Technologies Solly Malatsi, a DA member in the coalition government, issued a policy directive to review ownership requirements in the information and communication technology (ICT) sector.
Malatsi
Portfolio committee chairperson Kusela Diko had invited Malatsi to explain the policy directive and said other telecom companies do business in the country without complaint.
Malatsi told committee members that his department sought to allow contribution to transformation besides share ownership to historically disadvantaged groups.
Portfolio committee members accused Malatsi of seeking to draw back transformation for the sake of one multinational company and for using a ministerial policy directive instead of tabling a bill to amend legislation.
After receiving public comments in the next 30 days, the Independent Communications Authority of South Africa (Icasa) will conduct a six-month study on whether equity equivalent programmes (EEIPs) can be implemented in the ICT sector.
While the ANC is considering EEIPs under the Transformation Fund as an alternative to the 30% share requirement, it rejected Malatsi's policy directive, stating there was no deal struck during the Washington visit.
Economic Freedom Fighters committee member Sinawo Tambo criticised Malatsi for using a ministerial directive to amend legislation, and said the tactic sought to circumvent parliamentary processes.
uMkhonto weSizwe party portfolio committee member Colleen Makhubele said Malatsi was using a 'clandestine unilateral approach' to fast-pace licensing of Starlink instead of empowering 490 already licensed network providers.
Although South African billionaire Johann Rupert,
When answering Michalakis' question during the Q&A Ramaphosa said he would initiate a 'regulatory review process' that would unleash 'speed of execution' in government administration but doubted BEE was the issue holding the economy back.
Corné Mulder, leader of the Freedom Front Plus, asked whether Ramaphosa was prepared to take a different approach, away from BEE and the Expropriation Act, to stimulate the economy.
Ramaphosa said his starting point was the redress of past black economic exclusion and cited an International Monetary Fund report that highlighted the concentration of capital and ownership, where the top 10% own 86% of the wealth as the hurdle for growth.
'I'm rather surprised and taken aback when I hear that the policy of BEE militates against the growth of our economy. That I find surprising,' he said.
'If we accept that ownership of our economy is imbalanced, the clause on equality in our constitution seeks to undo that. So therefore ownership in our economy should be broadened,' he said.
Build One South Africa leader Mmusi Maimane agreed that the EEIPs as an alternative to share holding are important to attract foreign investment and asked Ramaphosa whether these will be extended to South African companies.
Ramaphosa said his government was looking at a number of laws that would address both past racial exclusion and growth to build an inclusive economy.
'To do so we need to take into account where we come from, what our constitution says, what our laws say and be able to move forward in a very determined way,' he said.
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