Microsoft, AWS and Dell and their peers operate peacefully in South Africa by way of a bit of classic magic: making one concept mean entirely different things depending on where in the world you are based.
In South Africa, “Equity Equivalent Investment Programme (EEIP)” is a long way of saying “tax”. If you want to do business in SA, and you can't or won't offer up the requisite equity, then you pay the tax.
To the investors and other stakeholders of those huge companies, EEIP is a set of charitable donations. If you do business somewhere relatively poor, then you put some money towards good deeds.
This keeps everyone happy. South Africans can rest assured knowing the companies aren't getting away with not contributing to B-BBEE. The companies can speak of the upliftment work they do and how they contribute to economic growth without having to dwell on the reasons.
This is important because there are much uglier ways to think of EEIP. “Blackmail” and “bribery”, for instance.
And if the Dell EEIP keeps going the way it is tending, those words could come into play, with consequences for the entire scheme.
The unhappy council
ITWeb this week reported on some behind-the-scenes drama in that Dell renewal that bodes ill for the sector, and perhaps beyond.
Dell has laid out how it will invest hundreds of millions of rands in various good works into the 2030s, because Dell wants to do business in South Africa and that is the price of admission.
Communications and digital technologies minister Solly Malatsi signed off on that plan, because he wants Dell to do business in South Africa and, you can fairly expect, both he and the Department of Trade, Industry and Competition get that this is not the time to rock the boat.
But we now know that the B-BBEE ICT Sector Council was unhappy with some of Dell's plans and with its failure to trust the council with confidential details.
To the investors and other stakeholders of those huge companies, EEIP is a set of charitable donations.
The council comes across as a body currently contemplating moving towards the opinion that rocking the boat might be called for, with such radical ideas as that enterprise development shouldn't count if the developed enterprises are left to fend for themselves soon after their supposed development.
That is all it would take, the ICT Sector Council demanding that "equity equivalent" impact should be tracked beyond the money put into the scheme. The environment is explosive, and that is a spark.
Elon Musk has moved on from his “142 laws forcing discrimination against anyone who is not black” take on South Africa. US president Donald Trump has his hands very full right now. But they are representatives, not the sole examples, of an America that is allergic to US companies being coerced. It will take exactly one member of the US legislature to say the word “bribe” or “blackmail” for 10 different types of chaos to be unleashed.
In South Africa, the EFF and MKP (for two) would love to go after the oh-so-rich ICT companies as the defenders of ordinary South Africans being short-changed on BEE. And that's ignoring the ever-roiling internal battles between the left and the far left within the ANC. The opportunity to cast the ANC as under the sway of DA economics is everything those elements asked for Christmas.
More so even than companies in other sectors, the ICT vendors have been consummately diplomatic about this stuff forever. They don't really care, as long as the numbers work out. Tax is just a fact of life.
It gets hard, though, to be diplomatic in a world where the biggest customer in your primary market treats white South African farmers as refugees from genocide. Sometimes you have to make hard choices.
And if the spell that makes EEIP work is broken because of the Dell case, who knows how far that goes?
As you may have noticed, things are a little bit wild these days.
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