Elon Musk backlash over Starlink deal in South Africa
The South African government has drawn heavy criticism for its proposal to loosen its Black Economic Empowerment (BEE) laws to accommodate Elon Musk’s Starlink.
Elon Musk exited the White House and immediately got himself caught up in more political drama, this time in his home country of South Africa.
The South African government is reportedly in the process of loosening its empowerment laws to accommodate Starlink, a feat that the South African telecom company, Vodacom failed to achieve.
Backlash over Starlink deal
The South African government has proposed to loosen its Black Economic Empowerment (BEE) laws to accommodate Elon Musk’s Starlink. This proposal has sparked public outrage and caused opposition parties to accuse the acting government of striking a “backdoor deal” to give the US tech giant preferential treatment.
Under existing regulations, telecom companies are required to sell at least 30% of their local equity to historically disadvantaged South Africans to operate in the country. The government intends to loosen the laws just enough to allow telecom companies to bypass that strict 30% Black ownership requirement by investing in alternative empowerment initiatives.
The government has been under pressure to improve internet access and modernize telecommunications, and argues that the law change is part of its economic reform strategy.
Critics have warned that the government’s decision sets a dangerous precedent by prioritizing foreign capital over domestic equity.
Opposition parties like Build One South Africa (BOSA) and the Economic Freedom Fighters (EFF) are leading the growing backlash against the government’s proposal. The BOSA deputy leader, Nobuntu Hlazo-Webster, said that the party has formally requested a public record of the decision from parliament to ensure transparency.
“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,” she said. “We cannot build an economy based on exceptions. Our laws must apply equally to all—foreign or domestic, rich or poor.”
Roger Solomons, a BOSA spokesperson, described the move as “impulsive” and accused the government of rewriting long-standing transformation rules to make Starlink’s market entry “favorable to them, and not the country.”
The EFF’s Julius Malema warned that he would oppose the decision in parliament. “We cannot be dictated to by business,” he said.
South Africa’s BEE laws
The loosening of rules in the telecom sector has inspired other industries to seek similar treatment. In the mining sector, the Minerals Council South Africa has urged the government to exclude exploration companies from proposed Black ownership requirements.
A new mining bill seeks to enshrine into law a 30% Black ownership target for mining companies. Allan Seccombe, the communications director at the Minerals Council, said: “Prospecting is extremely high risk. There’s no guarantee they’re going to find something that’s economically viable. Every cent they raise should ideally go towards drilling out or finding a resource.”
The Democratic Alliance (DA), the second-largest party in the ANC-led coalition government, is currently challenging the BEE laws in court.
James Lorimer, a DA Member of Parliament, said that the proposed mining legislation will “effectively end the already tottering case for foreign investment in South African mining.” He added that the bill “seeks to double down on racial transformation and brings back a legion of bad ideas.”
Despite mounting pressure, President Cyril Ramaphosa has remained firm in his defense of the BEE laws. In a parliamentary session this week, he rejected claims that the empowerment policies were stifling economic growth.
“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. “It is the partial and exclusive ownership of the means of production in our country that is holding this economy from growing.”
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Original reporting: cryptopolitan.com
