Posted by Mteto Nyati
Managing Director, Microsoft South Africa
Broad-based Black Economic Empowerment (B-BBEE) is an initiative launched by the South African Government to address the restrictions that exist within the country for Black individuals to participate fairly in the economy. As part of its BBBEE programme, Microsoft is to invest R472 million – as well as skills, time, knowledge and best practices – to build several sustainable, independent majority black-owned software companies over the next seven years in South Africa.
We didn’t really need to be told by The Economist, of all publications, that black economic empowerment has been less than a resounding success in South Africa (http://www.economist.com/world/middle-east/displaystory.cfm?story_id=15824024).
We already knew that. As the article points out, even President Zuma seems to agree that BEE has resulted in a small core of super-rich black people who benefit from most BEE deals, while the intended beneficiaries – the millions of black people excluded from the mainstream economy by the apartheid government – have once again been left out in the cold.
Trade and Industry Minister, Rob Davies, says the country can only be transformed if empowerment plays its rightful role in business. Empowerment is not just a financial hand-out: it’s a vehicle for giving people the skills they need to make their way in business.
That’s why I’m particularly proud of the equity equivalence deal announced by my company, Microsoft SA, on 23 April. In short, we’re going to choose between five and ten small, black-owned software development companies, and pour a good deal of time, energy and resources into helping them become decent-sized companies that can stand independently on a global stage.
The highlight of this deal is not the amount of money that we intend to spend, although at half a billion rand, it’s not insignificant.
For me, what makes this deal different is a few things. One, there’s not a usual suspect in sight. This is not a box-ticking exercise. We’re not selecting these companies because of what they currently do, but because of what we believe they can become. We believe that if we pick good people, they will find their niche. We want to give smart people the break they need to fly.
Two, it’s got the potential to create an entirely model of entrepreneurship in this country. We’re looking to build businesses here.
Three, it’s going to create skills and jobs in a sector – and an economy – crying out for them. The country faces a significant shortage of technology skills, as well as chronic unemployment. This investment will tackle both by building a sustainable, black-owned technology ecosystem.
And four, it’s unique in that we’re not just throwing money at a generic problem, but backing it up with expertise, support and mentorship. In other words, we’re putting some real skin in the game here.
Obviously, there will be the cynics. There have been too many BEE false starts for people to be entirely convinced. But the fact is that this deal, at its heart, is a good business deal. The impetus for Microsoft is to be more locally relevant, and locally responsible in terms of social investment and BEE. Relevance and responsibility are critical aspects of being a local, committed corporate citizen, and this investment underlines our intention in a big way.
While development is key, we are balancing this with the commercial opportunities for all involved. The companies that grow out of this investment, and the software that they develop, will help Microsoft and its partners reach new markets. The investment should galvanise the local software economy and leave a legacy for other entrepreneurs.