South Africa: Microsoft gets nod for BEE deal

Computing

Software giant Microsoft SA expects to name the first four or five winning partners in its multimillion-rand empowerment deal by next February. This comes after it dispelled government's concerns, which had held up the announcement for several months.

Microsoft's scheme is anticipated to further transform empowerment in South Africa, as the company has already had calls from other multinationals seeking advice on how they can implement similar empowerment structures.

The software company first announced its R472 million empowerment deal in April, saying it will partner with a handful of software developers, providing investment and advice, in a bid to grow start-up firms into multinational giants.

Analysts previously described the deal as “unique in SA” and it has been hailed for empowering smaller companies instead of the usual suspects. Microsoft will fund start-up enterprises and provide business knowledge to help them become global software players, but will not take equity stakes in the companies in return.

It received more than 680 applications from prospective companies in response to its nationwide request for proposals. Of these, 141 met the qualifying criteria, and were whittled down further through a selection panel.

The company expected to announce the first handful of partners in October, but this was held up when concerns arose within the Department of Trade and Industry (DTI) over how to measure the outcomes of the equity equivalency plan.

Microsoft SA MD Mteto Nyati says he met with DTI acting director-general Lionel October early last month and the parties agreed on a memorandum of understanding that now only needs to be signed off.

Once the deal has been signed, the company will receive 20 ownership points, which it will earn in return for offering the equity-equivalency plan, says Nyati. He hopes to be in a position to announce the first four or five companies that will benefit from investment and assistance in the middle of next month.

Nyati says another one or two companies could benefit from the deal this year and Microsoft will open up the offer for new applications. However, after wrapping up the DTI's concerns, the process is expected to run faster.

Microsoft SA has had a number of enquiries from companies seeking guidance on how to implement a similar deal, says Nyati. His sense is that some multinationals may replicate Microsoft's deal to some degree.