SA’s ‘equity’ hurdles limit investment in satellite internet service, Starlink - Biznews

The signing into law of the Employment Equity Amendment Act in South Africa has been met with opposition, particularly from the Institute of Race Relations. The Act grants the Minister of Employment and Labour the power to impose “targets” for employment of people according to the requirements for transformation as envisaged by the Minister. The Act exposes roughly 85% of the formal private sector workforce to the power of the Minister to impose race quotas and effectively reintroduces the pre-disqualification system in government procurement. This approach is criticized for playing with numbers at the top end of employment without addressing the issue of unemployment among under-educated and under-trained individuals. In a related matter, South Africa could be one of the few African countries not to receive Elon Musk’s Starlink’s satellite Internet service due to regulatory hurdles that require a minimum 30% equity ownership held by persons from historically disadvantaged groups. This provision is seen as a shakedown by some and is among the top reasons why foreign companies may not invest in South Africa.

Sara Gon

The major news last week, and deservedly so, has been the signing into law of the Employment Equity Amendment Act (the Act).

The Institute of Race Relations has been implacably opposed to it since it first saw light of day as a Bill. The Minister of Employment and Labour (who is living down to his title) now has the power to impose ‘targets’, not ‘quotas’, mind you, for the employment of people according to the requirements for transformation as envisaged by the Minister.

IRR Fellow, Gabriel Crouse, states that the Act’s two primary effects are to expose roughly 85% of the formal private sector workforce to the power of Minister Nxesi to impose race quotas, and secondly to effectively reintroduce the pre-disqualification system in government procurement, according to which companies are prevented from bidding if they do not abide by racial requirements.

This is an aggressive strategy.  It means playing with numbers at the top end of employment on behalf of people who are either already in employment or are employable.

It does absolutely nothing for the millions and millions of people who are not employed, and are increasingly less likely to be employed. It is the people who are either under-educated, under-trained or just having to compete with too many other people with limited skills, who need to be employed. The problem is that most of these people are competing desperately for jobs where there is more than an oversupply of potential applicants.

Employ more people

These are the people who need employment without reference to skin colour and quotas. Investment in this country has to be increased, to encourage business growth and thus the need to employ more people.

The Act is unconstitutional in at least four ways:

Section 1 requires the certainty demanded by law;
Section 9 prohibits forms of BEE that make the rich richer while leaving the poor to languish in poverty;
A technically precise reading of Section 195 indicates that public sector measures should not bleed into the private sector in this way;
It violates Section 217 which requires adherence to the imperative to ‘maximize value-for-money’.
The national handwringing that accompanies ever-increasing ‘inequality’ in this country is not due to the predominance of whites in employment. Inequality increases even more when the number of whites is discounted. Inequality is greatest when measuring poor blacks against middle class and rich blacks.

This is not a crisis that can be resolved by putting more blacks in senior management; it needs to be addressed at the level of the over 7,000,000 unemployed people.

In a related matter Eswatini, Nigeria, Mozambique, Angola, Gabon, Kenya, Malawi, Rwanda, and Tanzania have taken up Elon Musk’s Starlink’s satellite Internet service globally when it opened its beta testing to the public in November 2020.

Spread internet availability

The satellite internet system from SpaceX is capable of delivering 150Mbps internet speeds to theoretically any place on the planet. The idea is to spread internet availability to many more people than have access as present.   

Starlink involves beaming internet data, not through cables, but via radio signals through the vacuum of space. Ground stations on the planet broadcast the signals to satellites in orbit, which can then relay the data back to users on Earth.

Despite multiple Starlink satellites covering the country at any point during the day, the company has not launched in South Africa. It said availability would be subject to regulatory approvals.

This is according to Democratic Alliance (DA) MP Dianne Kohler Barnard, who was responding to a written response to Parliamentary questions from the Minister of Communications and Digital Technologies, Mondli Gungubele.

There may be a number of regulatory approvals required but the kicker is this one from Gungubele: ‘For Starlink to operate in South Africa, they require… Individual IECS/IECNS applicants or licensees to have a minimum 30% equity ownership held by persons from historically disadvantaged groups’.

Kohler Barnard said: ’It is simply laughable that an international multibillion-dollar company must hand over at least 30% of its equity to the ANC government in order to operate.

She added that, instead, the ANC would prefer to ‘keep the people in the digital dark, uneducated, and unable to create prosperous opportunities for themselves or lift themselves out of extreme poverty’.

Regulatory hurdles

More than 20 countries on the continent have either rolled out or are scheduled to receive the satellite Internet service in the near future. South Africa could be one of the few African countries not to receive Starlink due to these regulatory hurdles.

Well, there it is then. The 30% ownership provision is one of the top reasons why foreign companies will not invest in this country.

In Mafia-speak this would be called a shakedown.

Sara Gon rants professionally to rail against the illiberalism of everything. Broke out of 17 years in law to pursue my classical music passion and run the Joburg Philharmonic, but had to work with musicians. Working with composer Karl Jenkins was a treat. Used to camping in the middle of nowhere. Have 2 sons for whom no girl is good enough, says mom.

https://www.biznews.com/sa-investing/2023/04/24/sas-regulatory-hurdles-limit-investment-satellite-internet-service-starlink

This article was first published on the Daily Friend.