The Scoop
The South African government is considering ways for Elon Musk’s companies to invest in the country without complying with the nation’s Black empowerment rules, three people familiar with the matter told Semafor.
South Africa’s government last year spoke to the billionaire about investing in his country of birth after Musk’s satellite internet service, Starlink, approached the government over securing regulatory approval. Under the country’s Black economic empowerment policy, introduced nearly 30 years ago to reduce apartheid-era inequality, at least 30% of the South African operation of any Musk-owned company such as Tesla or Space X would have to be sold or donated to Black locals.
Government officials have discussed allowing Musk’s companies to sidestep these rules by using an “equity equivalent” option, such as social investment, according to the people. They said this approach, which could include free internet connection to government schools and police stations, was first touted after President Cyril Ramaphosa met with Musk on the sidelines of the United Nations General Assembly in September.
Officials in South Africa’s telecommunications and trade and industry departments have discussed the options since the two met last year, according to one of the sources.
The three people — two senior government officials and a prominent businessman who advises Ramaphosa’s administration — spoke to Semafor on condition of anonymity because they are not authorized to discuss the matter publicly.
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Tensions have risen between Washington and Pretoria in recent days. US President Donald Trump signed an executive order last week freezing funding to South Africa over its new land expropriation law, which he and key ally Musk criticized.
The law, passed last month, aims to address inequalities dating back to apartheid which mean most private land is owned by white people who make up around 7% of the population. It allows the government to confiscate land in exceptional circumstances if deemed to be in the public interest. No land has been seized under the legislation.
US Secretary of State Marco Rubio said he will not attend an upcoming G20 meeting in Johannesburg over the matter. Ramaphosa, in his annual state of the union address on Thursday, said South Africa “will not be bullied,” while his mining minister suggested withholding critical minerals from the US.
But South Africa’s coalition government, which took office in June and is keen to attract investment to burnish its pro-business credentials, has previously made clear that it is keen for Musk’s businesses to have a presence in Africa’s most industrialized nation.
Starlink, which delivers broadband internet from more than 5,000 satellites deployed by sister company SpaceX, currently operates in more than a dozen African nations. But it has failed to secure regulatory approval in a number of countries, including South Africa.
It is not clear how the tensions of recent days may affect its push to woo Musk.
Spokespeople for the telecommunications and trade and industry departments did not immediately respond to requests for comment.
Sam’s view
South Africa has made no secret of its desire to attract investment from its prodigal son. But the conversation might happen in a muddled environment due to the increased tension of the last few days.
The appeal is clear: Starlink, which delivers broadband internet beamed down from a network of roughly 5,500 satellites deployed by sister company SpaceX, could cut the cost of internet access and boost the economy.
But any decision to offer sweeteners to Musk would have to be weighed against the potential political blowback in South Africa. The billionaire, who spent much of his childhood in apartheid-era South Africa and heads the newly created Department of Government Efficiency in the US, seems to be playing a pivotal role in the Trump administration’s increasingly strident tone toward his country of birth.
Last week Ramaphosa’s office said South Africa’s president spoke to the billionaire in an attempt to defuse the row over the new land law after the billionaire asked on X why he had “openly racist ownership laws.”
But politically charged pronouncements that affect South Africa are being made by the Trump administration on a near daily basis. The decision to dismantle USAID looks set to have a huge impact, since Washington’s main foreign aid body supported about 17% of South Africa’s HIV/Aids programs.
Despite the uncomfortable optics for the party that led South Africa out of apartheid, the tensions with Washington could speed up conversations between the government and Musk’s companies. Pretoria is concerned about prolonged tensions with the US, which might negatively affect its fragile economy. It will thus be looking to reach agreements with both Washington and Musk as soon as possible.
Room for Disagreement
The Economic Freedom Fighters, a radical leftist party formed as an offshoot of the African National Congress, would almost certainly criticize any attempt to attract Musk’s companies by circumventing Black empowerment rules. Its leader, Julius Malema, has been embroiled in a war of words with Musk in the last few days. The billionaire posted a video on Sunday, in which the EFF leader appeared to condone violence against white people, and wrote: “Immediate sanctions for Malema and declaration of him as an international criminal!”
The EFF, in a statement, said “Musk has assumed the role of a global billionaire maniac” as part of a “general hysteria” that has overtaken the US. It said Musk “must be viewed as an imperialist who seeks to undermine the economic and political sovereignty of South Africa through sanctions.” The EFF also accused him of having “captured” the US presidency, saying he has “weaponized his office as an instrument to pursue his business interests globally.”
Notable
- Trump’s offer to rehouse white South Africans as refugees fleeing “unjust racial discrimination” seems unlikely to spur a rush of takers, Al Jazeera reported.