Starlink’s BEE ‘back door’ slammed

South Africa’s lawmakers challenged a plan to provide an alternative to Black ownership rules that will pave the way for Elon Musk’s Starlink to operate in Africa’s biggest economy.

“We are not going to accept a situation where our laws are going to be rewritten in Washington,” Sixolisa Gcilishe, a member of the leftist Economic Freedom Fighters, told a meeting on Tuesday in Cape Town.

Communications and Digital Technologies Minister Solly Malatsi of the Democratic Alliance, the second largest party in the nation’s governing coalition, last week proposed amending rules to allow companies like Starlink to enter South African without sharing ownership. 

The proposal offers a workaround to South Africa’s Black economic-empowerment laws, which generally require 30% Black ownership in businesses operating in the country.

The directive was issued two days after President Cyril Ramaphosa met his US counterpart Donald Trump in Washington to mend relations that have been strained on several fronts, including Trump’s false claims of a White genocide in South Africa which Musk has shared. Musk attended that Oval Office meeting.

The ANC, the largest member of the coalition, also criticised the plan.

“This is leaving an opportunity for international players to come through the back door,” said the ANC’s Tshehofatso Chauke.

It “favours big business rather than the interests of South Africans and those who are previously disadvantaged.”

Whether the government can make the proposal under existing law or needs to win the backing of parliament to change legislation is a subject of debate.

Some lawmakers called for a legal opinion on Malatsi’s proposal, arguing it might not supersede the Electronic Communications Act, which governs licensing in the telecoms sector, and may require a change to legislation. Others said the proposal complies with domestic laws.

Malatsi said the plan addresses a gap in the regulations and would give foreign companies two options to enter South Africa — either Black ownership or an equity equivalent scheme.

South Africa introduced Black ownership rules after the end of apartheid, an era in which Black people were excluded from the formal economy by the ruling White minority.

Musk, who was born in Pretoria, has called South Africa’s race-based laws “openly racist.”

Starlink’s technology, which relies on low-Earth orbit satellites, would be a potential game-changer for South African users who’ve historically faced expensive or unreliable internet options.

Only 1.7% of rural households have access to the internet, according to a 2023 survey compiled by the local statistics agency.

MTN Group Ltd., the largest mobile operator in Africa by footprint, has started trials with satellite operators including Starlink in some markets where the service is allowed.

Last month, Ramaphosa appointed his Chairman, Mcebisi Jonas, as special envoy to the US to help repair relations between Pretoria and Washington that have deteriorated under Trump.  

MTN said last week it’s reviewing the details of the policy directive for the South African market, and will submit comments within the 30 day response period.