Tech giant Microsoft has reached an agreement with the government to invest R1.3bn over the next 10 years in BEE and skills development for black youth.
The investment falls under the equity equivalent investment provisions of the Broad-based Black Economic Empowerment Act intended to offer an alternative to multinationals that cannot sell stakes in their companies to black equity partners.
The provisions allow these companies to accumulate BEE points through enterprise and supplier development; skills development; and research & development to promote BEE. A high number of points on a BEE scorecard assist in winning contracts, including from the government.
Trade, industry & competition minister Ebrahim Patel formally signed and issued the certificate to Microsoft at an event Tuesday.
The agreement between Microsoft and the department of trade, industry & competition will see the R1.3bn invested in black-owned small, medium and microenterprises (R663m) in both the technology and non-technology sectors. It will also be used for skills development of black youth in emerging technologies (R347m) and includes a commitment to research & development (R160m) to prepare SA industries for the fourth industrial revolution.
The value of the financial commitment is calculated on estimated turnover of the company over the next 10 years.
Similar agreements have been struck over the past five years. These include a R6bn automotive industry transformation fund with seven large vehicle manufacturers; a R384m investment by Amazon Web Services; a R340m fund established by JPMorgan; and a R200m grant by Citibank for black industrialists in the Vaal special economic zone.
Patel noted in a statement that the equity equivalent programme was introduced to enable foreign-owned businesses to operate in the domestic environment.
“The R1.3bn Microsoft deal, the largest by a single company under the equity equivalent provisions of the legislation, brings the total value of agreements concluded during this administration to more than R8.2bn.
“Since we started the black industrialist programme eight years ago, we have built a network of more than 1,700 black-owned and controlled industrial champions, which have been backed by the department of trade, industry & competition and its agencies. These firms employ more than 160,000 South Africans directly. The Microsoft fund will assist in accelerating the development of black industrialists, equipping them with the technology needed to thrive in the fourth industrial revolution,” he said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.