……wow, Microsoft playing Big brother to South Africa’s Start up software companies
In one of the biggest equity equivalent deals seen in South Africa to date, Microsoft is to invest almost half a billion rand over the next seven years into the local software industry.
The deal, announced today by Trade and Industry Deputy Minister Maria Ntuli and Microsoft South Africa managing director Mteto Nyati, is part of the company’s broad-based black economic empowerment (BBBEE) programme.
It will see Microsoft spending R472 million into helping small, black-owned software development companies grow into global companies by 2017. Participants will be chosen from responses to a nationwide request for proposal, slated for issue in early May. It is expected that between five and ten companies will be part of the initial programme.
Speaking at the launch event in Sandton, the DTI’s Ntuli said the deal was noteworthy for addressing indirect elements of BBBEE such as skills and enterprise development.
“The country can only be transformed if empowerment plays its rightful role in business,” she said. “We need to ensure it is linked more effectively to the development of skills, and to growth of local businesses. The Microsoft programme covers both aspects well.”
Microsoft’s Nyati said the investment would directly address some of the key challenges facing the government and South Africa as a whole – namely creating jobs, developing enterprises, building the local software economy and developing scarce technology skills. It’s anticipated that the deal will take Microsoft from a Level 4 to a Level 2 BEE contributor, subject to the relevant audits.
“This is not just another BBBEE deal that features familiar faces and just ticks the boxes,” he said.
“We’re looking to take existing software development companies and transform them into companies that compete in South Africa and around the world in areas like cloud computing. We want to create a new model for entrepreneurship and set a new benchmark for developing talent in the local software industry. We want BBBEE to be associated with real development, job creation, business development and skills enhancement.”
Arthur Goldstuck, the managing director of technology research house World Wide Worx, welcomed the deal as a significant step for BEE in the technology industry.
“This is the first time a major multinational is willing to put both financial muscle and expertise behind the growth of the SME sector, as opposed to a generic offering of money that is not applied to a specific outcome,” said Goldstuck.
“Research from our annual SME survey points clearly to the fact that small businesses that think like big businesses, and use so-called big business tools, are far more likely to be highly competitive in their given field. If this deal is able to give the chosen companies that business approach and tools, it has a good chance of achieving something different in the BEE environment.”
There has been overwhelming support for the move from the highest levels of Microsoft. Ali Faramawy, Microsoft’s president for the Middle East and Africa, said at today’s launch that global CEO Steve Ballmer, president of Microsoft International Jean-Philippe Courtois and other senior leaders were completely behind the move.
“In the conversations with our global leadership team in Seattle, they made it clear that this was South Africa’s moment, and this was the time to step up our commitment to the country,” said Faramawy.
Read more here