South Africa’s government plans to offer Elon Musk a workaround of local Black-ownership laws for his Starlink internet service to operate in the country, aiming to ease tensions with both the billionaire and US President Donald Trump.

The offer will come at a last-minute meeting planned for Tuesday night between Musk or his representatives and a delegation of South African officials traveling with President Cyril Ramaphosa, according to three people familiar with the discussions.

It’s meant to defuse the onslaught of criticism by Musk and Trump — who’ve spread the conspiracy theory that there’s a genocide against White people in Africa’s most-industrialized nation — before Ramaphosa’s visit to the White House on Wednesday, said the people, who asked not to be identified as they’re not authorized to discuss the matter.

The rand strengthened on the news, advancing as much as 0.7% against the dollar and trading 0.5% stronger at 18 per dollar by 3:21 p.m. in Johannesburg.

“News regarding the Starlink workaround regarding Black-ownership laws for Elon Musk to provide internet services in South Africa have boosted investor optimism regarding a favorable outcome resulting from the upcoming Ramaphosa-Trump meeting,” said Phoenix Kalen, head of emerging-market research at Societe Generale SA.

The alternative to so-called Black economic-empowerment laws that in some cases require 30% Black ownership is not specific to Starlink and Musk, the people said. It would be applied to all information and communication technology companies, including those from China and the Middle East, the people said.

A so-called equity-equivalent option would instead involve investments in infrastructure or training, or providing Starlink kits to rural areas in order to help improve Internet access. The auto industry in 2019 signed up for a similar workaround that involved the largest car manufacturers — including BMW AG, Ford Motor Co. and Toyota Motor Corp. — setting up a fund to invest in bring disenfrachised groups into the sector.

South Africa introduced BEE rules after the end of apartheid, during which Black people were subjugated and excluded from the formal economy by the ruling White minority. Today, White people earn on average five times what Black citizens do, according to official statistics, and own the vast majority of farmland despite making up 7% of the population.

The new rules for ICT firms aren’t about “providing access to a single company, but rather part of a broader strategy to create an enabling environment for international investment and expand digital connectivity across South Africa,” the country’s Department of Communications and Digital Technologies said in a response to a request for comment. They form part of the government’s “medium-term plans,” it said.

Starlink Talks Stall

Talks on launching Starlink in South Africa stalled earlier this year after Musk and Trump ramped up public rhetoric against policies such as BEE laws.
Musk, who was born in Pretoria, claimed that he was not allowed to operate his satellite service in South Africa “because I’m not Black” and accused the government of having “openly racist ownership laws.”

Trump has also granted refugee status to minorities in South Africa and criticized a law that gives the government the power to take land for a public purpose. The act is similar to US eminent-domain laws — though the legislation in South Africa allows for expropriation without compensation in certain cases such as land that’s been abandoned and state-owned property not in use.

For now, the government hasn’t seized any land, though millions of people have taken occupation of private and state property — official data show that about 12% of households are situated in informal settlements.

Trump twice last week repeated the false claim that White people are subject to a genocide in South Africa. A local court in February ruled that there was no evidence to support the claim, calling the idea “clearly imagined and not real.”

South Africa’s talks with Musk over Starlink won’t necessarily form part of a proposed larger trade deal with the US, though getting the entrepreneur on board may assist with more positive engagements between the two countries, said the people familiar with the discussions.

Starlink’s technology, which relies on a constellation of 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.

--With assistance from Alexander Parker, Ana Monteiro and Mpho Hlakudi.