Microsoft to invest in SA firms

April 23, 2010

, JOHANNESBURG, Apr 23 – Microsoft is to invest half a billion rands in small black-owned software development firms in South Africa, the company said on Friday.

The deal falls under South Africa\’s black economic empowerment policies introduced in 2003, to redress apartheid-era laws which barred most black people from any meaningful economic activity.

"We want to create a new model for entrepreneurship and set a new benchmark for developing talent in the local software industry," Microsoft South Africa managing director Mteto Nyati told AFP.

"We want (black economic empowerment) to be associated with real development, job creation, business development and skills enhancement.

"We came up with something unique and hope this model would be used by other companies."

The empowerment deal will see the company invest 472 million rands (67.4 million US dollars, 50.3 million euros) over the next seven years into the country\’s software industry.

"The local industry is largely consumption based today. We take software packages developed in other countries… there is nothing that is coming from South Africa," Nyati said.

Beneficiaries will be chosen from responses to a nationwide request for proposal which will be advertised on April 28.

Candidates will be screened by consultants KPMG, and the firms chosen will begin work with Microsoft as soon as July 2010, the company said in a statement.

"We’re looking to take existing software development companies and transform them into companies that compete in South Africa and around the world," Nyati said.

The investment follows several major empowerment deals. Brewer SABMiller sold 750 million dollars\’ worth of shares in its South African subsidiary to black investors in December.

Last month global pulp and paper group Sappi announced its plans to sell a 4.5 percent stake to black investors, enabling the company\’s local operation to have a 30 percent black ownership as required by law.

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