Red tape holds up Microsoft BEE deal

Mergers, Acquisitions and Financial Results

Microsoft is waiting for the department of trade & industry to give it the go-ahead for its empowerment plan so it can proceed with plans to invest nearly R500m in several local black-owned software development companies.

Red tape appears to be holding up the process. Micosoft had been expected to announce the names of the companies it will invest in at the end of May.

“If it were up to me, we would have the process underway already,” says Microsoft SA MD Mteto Nyati, who has now requested a meeting with trade & industry minister Rob Davies to ascertain if there is a way of accelerating the process. Nyati says the company has identified four companies from 650 applicants.

KPMG has assisted the company in the process. Representatives of the Shuttleworth Foundation, the Black Management Forum and the Centre for Entrepreneurship helped make the final selection of four.

But Nyati says the company’s investment plans now require the nod from the department, which has got involved to ensure Microsoft is giving the four black-owned businesses a “fair deal”.

The software giant announced its “equity equivalence” plan in April. In terms of the plan, it will invest R472m in the identified companies over the next seven years.

The plan was hatched between Microsoft and the department because, like other US companies, Microsoft can’t sell a stake in its SA operation for regulatory and other reasons.

Nyati says trade & industry is doing the right thing by reviewing the process. “They have to make sure that the companies we have chosen will get the best out of the investment,” he says.