Starlink, created by Elon Musk’s SpaceX, has gone to great lengths to provide high-speed internet to remote areas of South Africa. Unfortunately, during this important work, it faces overt and opaque challenges. The company’s goal is to close the digital divide. It prioritizes underserved rural communities that don’t have access to other more conventional forms of connectivity such as mobile broadband and fiber. Regulatory and ownership requirements imposed by South Africa’s black empowerment laws have hampered its development. Unfortunately, this failure by the company has left them without the licenses needed to operate.
To operate in South Africa, Starlink must obtain network and service licenses, which stipulate that at least 30% of ownership must be held by historically disadvantaged groups. This requirement is instrumental to the larger framework created to ensure a widespread, revolutionary economic transformation – including in the technology sector. Starlink’s application for a telecommunications service license has encountered delays, with accusations suggesting that the company’s reluctance to comply with local ownership regulations has hindered its entry into the South African market.
Starlink, which would become the first foreign satellite operator in Africa has filed for a telecommunications service license in Namibia. The application is now being processed by the Communications Regulatory Authority of Namibia (Cran). The average processing time for these types of applications is three to six months. Starlink’s decision is still pending. To finish the process, the company requires Namibia’s Minister of Information and Communication Technology to sign off on its ownership exemption application.
South African Communications Minister Solly Malatsi has proved a valuable ally for Starlink in threading the needle through these dense regulations. We’ve been hearing reports that he’s looking for ways to get around the 30% black equity requirement. Malatsi intends to publish a “policy direction” to Icasa, the Independent Communications Authority of South Africa. This measure seeks to make clear the recognition of equity equivalent programs and perhaps create an opening to allow Starlink into the market.
Those criticising Starlink’s late launch in South Africa are missing the story. They claim that the country’s black empowerment laws are hampering the company’s success. These laws require that foreign investors sell, or give local black firms, at least a 30% share in their enterprises. In fact, Starlink has received significant pushback even for what it sees as a defiance of these regulations.
Khusela Diko, spokesperson for the South African government, emphasized the importance of transformation within the tech sector, stating, “Transformation in the tech sector was non-negotiable.” She further asserted that “cutting corners and circumvention is not an option – least of all to appease business interests.”
In light of this regulatory struggle, Elon Musk has reported the gnashing of teeth. He claimed that his inability to operate in South Africa is primarily due to his race, stating, “I’m not allowed to operate in South Africa simply because I’m not black.” That particular assertion has set off quite a furor. It has shined an unprecedented spotlight on the national debate over race and economic policy in this country.
Musk’s remarks have once again raised the specter of apartheid-era tensions between him and SA political actors. He called the Economic Freedom Fighters party “a big” political party that’s made up of a lot of these black majority who are against his business ventures. Now, political leaders are openly lamenting Musk’s influence. They go so far as to describe his close relationship with President Cyril Ramaphosa as a bromance. Ramaphosa said that their roundtable discussions had “bedded down” some crucial issues around technology transfer and investment.
The US has issued strenuous objections to South Africa’s black empowerment laws. Former President Donald Trump blasted these policies, going so far as to slap South Africa with a 10% tariff on its goods. This decision mirrors broader geopolitical tensions and highlights the growing complexities of foreign investments in South Africa.
Starlink is still aggressively pursuing expansion into other markets. It faces a tricky and confusing terrain of regulatory hurdles and political pressure. A loss on either application in South Africa or Namibia could have serious repercussions on its global expansion strategy. This new initiative is an important step in our collective efforts to deliver high-speed internet services to those with the most pressing need.