Elon Musk’s interest in South Africa’s digital market and why we should oppose it

The ambition of the company SpaceX, owned by Elon Musk, to enter the South African digital communications space has caused a stir. The Starlink satellite internet systems company, which also belongs to Musk, asked the communications regulator, the Independent Communications Authority of South Africa (ICASA), to modify their requirements of 30% shareholding by ‘historically disadvantaged’ groups as part of the conditions to operate its internet service in the country. In South Africa, companies must have at least 30% of their ownership or economic involvement owned by Black South Africans. This rule is part of the Broad-Based Black Economic Empowerment (B-BBEE) policy, which seeks to correct past economic inequalities from apartheid times by encouraging the economic involvement of disadvantaged groups.

Those eager to have Starlink internet in South Africa have called on the government to accede to Elon Musk’s company’s outrageous demands of changing regulations under the guise that this will accelerate access to connectivity for millions of South Africans to a reliable internet connection. While updating regulations can be seen as an appropriate response to the reality of delivering broadband connectivity in a time of rapid technological change, there is a real risk that it could erode the checks and balances meant to ensure transformation and economic inclusivity in a country that is still grappling with the legacies of colonialism and its racist policies.

SpaceX’s desire for special treatments

Modifying the regulations, colloquially known as BEE rules, to suit a specific player could potentially send mixed signals about South Africa’s regulatory stability and create uncertainty among investors who have already aligned their strategies with existing regulations. Despite this, ICASA held a public hearing and invited SpaceX to make presentations in an open forum. The company’s representatives did not pitch and later withdrew participation in the process. SpaceX’s decision to opt out of the hearing demonstrates its lack of interest in complying with regulations and its desire for special treatment.

The company is no stranger to pushing back against regulatory frameworks in countries where it wants to operate. It  has been accused of operating without obtaining licensing in numerous African countries. In Cameroon, the government suspended Starlink, as the company was operating without a license. In November 2024, the Communications Regulatory Authority of Namibia also issued a cease-and-desist order for similar reasons.

While concerns about national security and data breaches have been consistently flagged regarding Starlink’s operations, the company’s penchant for undermining regulations in sovereign states should frighten everyone. In South Africa, Starlink has not been willing to abide by the existing laws. Moreover, South Africa has suffered due to its founder Musk peddling misinformation against it.

South Africa needs to close its digital gap

SpaceX’s interest in entering South Africa’s digital market comes at a time when the need for affordable and reliable internet solutions to close the digital divide becomes urgent. The country’s social and political history have shaped its digital journey so far, with policies from apartheid responsible for the highly unequal infrastructure development. The South African government must deliver internet access to all its citizens without forsaking its principles of inclusivity, non-racialism, and non-sexism. These are the values that Musk does not seem to share with the country, if his support for dismantling programmes that support diversity, equality, and inclusion in the US is anything to go by.

As it embarks on implementing its digital strategy, South Africa will need to look for investors that align with its constitutional ethos and transformational goals. The country is currently rolling out the SA Connect programme, which focuses on improving access to affordable and reliable Internet services, promoting digital literacy, and leveraging technology to enhance economic and social development throughout the country. The initiative plays a crucial role in bridging the digital divide and empowering communities through improved access to information and communication technologies. Because many parts of South Africa still lack reliable internet due to infrastructure challenges, there is a need for satellite service providers for SA Connect to achieve its objectives. Starlink has been advertised as the leading choice for providing high-speed, low-cost satellite internet. SpaceX seems to be capitalising on the pressing demand for fast internet solutions to negotiate a license for Starlink’s operations.

Drawing lessons from India

In my recently published policy brief on South Africa’s digital transformation journey, I argue that in order to accelerate its digital transformation, South Africa can draw valuable insights from India’s Digital India programme. The two countries face some common issues with their socio-economic disparities, infrastructure limitations, and a large population base living in rural areas. In spite of its challenges posed by the digital divide, India managed to deliver digital services and infrastructure investments for its citizens without foreign-owned satellite service providers like Starlink. This is despite the fact that Starlink was keen to provide satellite internet, particularly in rural areas, to support the Digital India initiative. However, India has not included Starlink in its official digital strategy. In fact, it took a cautious approach toward Starlink’s operations in its territory. In 2021, India’s Department of Telecommunications ordered Starlink to stop taking pre-orders because it had not obtained the required regulatory approvals to operate. The government asked Starlink to refund deposits taken from customers and apply for a commercial license before providing satellite internet services in India. Instead, the country relied on domestic satellite programmes and private players like OneWeb, partly owned by Bharti Enterprises, for satellite internet.

Driving the South African digital transformation

Despite some similarities to India, South Africa faces some unique challenges that may make it difficult to deliver on the SA Connect programme, including the fact that it does not have a strong homegrown satellite industry like India has. This could serve as an opportunity for the government to invest in local technology companies and encourage local startups to enter the satellite broadband market. Just as India has advanced its digital strategy without relying on Starlink, South Africa should collaborate with private partners who align with its transformational values to drive the country’s digital strategy forward.

Tags: South Africa, Digital, Digital economy, Markets