By Bruce Hunt
How an Equity Equivalent Program Could Enable Starlink’s Entry into South Africa: eTV Interview?
The Morning Show – eTV Interview with Bruce Hunt
Host: Welcome back to The Morning Show right here on ETV. It is Think Tank Tuesday, and today we’re bringing you another inspiring story from our Real People in Technology series. Joining us live via Zoom is Bruce Hunt , Managing Director at Transcend Capital, a leader in structuring Broad-Based Black Economic Empowerment transactions for multinationals. Today, we’ll discuss Starlink’s potential entry into South Africa, the challenges it faces, and how innovative solutions like Equity Equivalent Programs could pave the way for a digitally inclusive future. Bruce, welcome to The Morning Show. It’s so good to have you with us.
Bruce Hunt: Good morning. Thank you. It’s good to be here.
Host: This is quite an important conversation for us to have. Let’s start with the significance of Starlink’s entry into South Africa and what it could mean for underserved communities.
Bruce Hunt: South Africa is quite different from many other African countries. While we have significant broadband penetration in urban areas and even some rural areas, there are still deep rural regions without broadband fiber or enough towers for internet connectivity.
Starlink’s technology can make a huge difference in these underserved areas. As our world accelerates towards digital integration, we have an obligation to ensure we don’t leave people behind. Starlink could bridge this gap by providing connectivity in places that traditional infrastructure can’t reach.
Host: How do you intend to bridge this gap and bring connectivity to underserved communities?
Bruce Hunt: I don’t work for Starlink, but we help multinationals like them navigate entry into South Africa. Companies often face regulatory challenges, including meeting Broad-Based Black Economic Empowerment (BBBEE) requirements. For example, obtaining a license from ICASA requires 30% black ownership.
Starlink could follow a model similar to what PepsiCo did with Pioneer Foods, where they established an enterprise supply development fund. This benefited both their supply chain and the country. For Starlink, this could mean partnerships in rural communities for initiatives like telemedicine or digital education. By donating excess satellite capacity or airtime to these communities, they could create meaningful impact while aligning with local legislation through Equity Equivalent Programs.
Host: Can you break down what Equity Equivalent Programs are and how they work?
Bruce Hunt: Equity Equivalent Programs (EEPs) were introduced by the Department of Trade, Industry, and Competition (DTIC) to accommodate international companies without local partners. Instead of direct ownership, these companies invest in developmental initiatives like supporting black businesses or education.
For example, Microsoft funded black developers in its supply chain, while Amazon helps black-owned IT companies become AWS consultants. These initiatives create local businesses and benefit the companies by enhancing their operations in South Africa. EEPs allow companies to meet BBBEE ownership requirements by committing significant resources to such projects.
Host: How can Starlink address broader issues like food insecurity or education while meeting regulatory requirements?
Bruce Hunt: In rural villages, Starlink’s connectivity could transform education by enabling access to internet-based learning tools and programs. Teachers could become more effective with enhanced content delivery. Telemedicine is another area where Starlink could make a difference, allowing remote consultations and operations.
Regarding food security, connectivity enables the use of satellite technology and drones for precision farming. Farmers can monitor crop health, determine the best times to harvest, and optimize resources without needing extensive on-site intervention. This enhances productivity and supports emerging black farmers.
For EEPs to work, they must address market failures, scale effectively, and provide a return on investment for the company. Starlink’s capabilities align well with these principles.
Host: What about regulatory hurdles?
Bruce Hunt: The main challenge lies with ICASA’s licensing regulations, which don’t currently recognize DTIC’s black ownership credits. Changes to these regulations require a formal public process, which takes time. My call to action is for these processes to move forward more urgently because real lives could be improved through initiatives like these.
Host: More lives need to be changed, and initiatives like these are critical for our nation’s growth. Bruce, thank you so much for your time and for shedding light on the potential of Equity Equivalent Programs.
Bruce Hunt: Thank you for having me. Have a great day.
Host: That was Bruce Hunt with us right here on The Morning Show, sharing insights on the potential of Equity Equivalent Programs and how they can bridge South Africa’s digital divide. As we’ve learned, these programs can create meaningful change and transform lives.
About Bruce Hunt BCom, CFA, MBA(Manchester) – Director at Transcend Capital
Bruce is the Managing Director at Transcend Capital. He has 12 years of experience in structuring multinational BEE transactions which include Black operational partners, employees, Broad-based Ownership Schemes, and the sale of assets to Black investors. Before joining Transcend Capital, Bruce was a trader and structured finance professional at Investec Bank.