Government and Microsoft Announce R1.3 Billion Investment to Empower Black-Owned Businesses and Youth in 4IR Technologies

Sandton, South Africa, 21 May 2024 – In a landmark move to bolster black-owned businesses and advance young South Africans in emerging technologies, Microsoft and the Department of Trade, Industry and Competition (the dtic) have inked a significant R1.3 billion investment deal. The initiative aims to nurture black-owned SMMEs and enhance skills in the burgeoning fourth industrial revolution (4IR) over the next decade.

The investment is structured under the Equity Equivalent Investment Programme (EEIP) of the Broad-Based Black Economic Empowerment Act (B-BBEE Act). This allows multinational corporations like Microsoft, which cannot facilitate local ownership, to gain BEE points through transformative objectives such as enterprise development, skills training, and R&D for black South Africans.

Minister of Trade, Industry and Competition Ebrahim Patel officially signed the certificate for Microsoft during a ceremony at their Sandton offices, sealing the agreement. The investment, pegged at R1.32 billion, is based on Microsoft’s projected turnover over the next ten years.

Allocation Breakdown:

• Enterprise Development (R663 million): Focused on tech start-ups owned by black South Africans and non-tech companies integrating AI and machine learning.
• Skills Development (R347 million): Intensive training for young black South Africans, providing 8-12 month certification courses in technologies like AI and data analytics, benefiting approximately 1,000 individuals.
• Research and Development (R160 million): Investment in R&D programs, including a R50 million consultation with the Localisation Support Fund to introduce emerging technologies into industrial initiatives.

The deal also includes provisions for marketing and administrative support to ensure the program’s effectiveness.

This agreement adds to a series of significant EEIP investments under the current administration, including the R6 billion Automotive Industry Transformation Fund and investments from Amazon Web Services, JPMorgan, and Citibank, totaling more than R8.2 billion.

Minister Patel highlighted the flexibility of South African law, which allows foreign investors to accrue BEE points through equity equivalent plans focusing on transformative development. He emphasized the importance of the Microsoft deal in accelerating the growth of black industrialists and integrating them into the mainstream economy.

“The R1.3 billion Microsoft deal, the largest under the equity equivalent provisions, underscores our commitment to developing black industrialists and equipping them with 4IR technology,” Patel said. “This fund will also help black South Africans in non-tech sectors leverage technology, enhancing their competitiveness and innovation capabilities.”

Lilian Barnard, President of Microsoft Africa, expressed the company’s commitment to driving job creation and growth in Africa’s digital economy. “This investment represents our dedication to empowering individuals and small businesses, fostering a digitally inclusive future for the region,” Barnard stated.

This strategic partnership between the South African government and Microsoft is set to empower the next generation of black South African entrepreneurs and innovators, positioning them at the forefront of the digital transformation sweeping across industries globally.