Microsoft South Africa pledges $71.6M for SMMEs, skills development

Microsoft South Africa plans to invest more than R1.3 billion (US$71.6 million) to support small businesses, create jobs, invest in youth skills development and ready the country for artificial intelligence (AI) transformation.

The ten-year agreement made with South Africa's Department of Trade, Industry and Competition was signed at a ceremony at Microsoft's headquarters in Johannesburg on Tuesday.

Microsoft said the funding will be used "to unlock inclusive growth, contribute to building a digital economy, foster entrepreneurship, and innovation, and fuel the job creation engine" in the Southern African nation.

The aim is to spur the development of small, medium-sized and micro enterprises (SMMEs), create local opportunities and provide skills in areas like data analytics, cybersecurity, AI and machine learning.

"The world is changing rapidly, and the era of AI is ushering in a future brimming with innovation, and the opportunity for Africa is immense. Through this program, we want to meet the demand for digital skills, whilst also creating opportunities for SMMEs to grow and thrive, and to leverage the innovative spirit of South Africans, with key investments in research and development that will stretch beyond borders," said Kalane Rampai, MD at Microsoft South Africa.

Under the agreement Microsoft has pledged:

Digital transformation of up to 42 SMMEs and startups, including access to markets to drive growth and become net job creators

Alignment with 18 Technical Vocational Education and Training (TVET) colleges to use technology to create better learning experiences for students, prepare them with future-ready skills and enhance employability

Equipping 200 SMMEs and over 2,000 individuals with advanced AI and other capabilities to narrow the current skills gaps and prepare for jobs of the future

Support for up to 20 advanced research and development projects to address the current and future policy needs of the country in cyber security and AI

Public-private partnership

The Department of Trade, Industry and Competition said the agreement makes provisions for skills development of young Black South Africans in emerging technologies and includes a commitment to research and development to prepare South African industries for the fourth industrial revolution (4IR).

"The Fund will assist Black South Africans in non-tech sectors to harness the power of technology and improve their competitiveness and ability to innovate and expand their operations. It will also act as a bridge to enable young people to get training, certification, and job-placement, so that talented South Africans gain access to the opportunities that arise from an increasingly digitalized world," Minister of Trade, Industry and Competition Ebrahim Patel said.

The investment, facilitated under the Equity Equivalent Investment Programme (EEIP) provisions of South Africa's Broad-Based Black Economic Empowerment Act (B-BBEE Act), is designed to provide multinationals like Microsoft – which are not able to facilitate local ownership in their companies – with an avenue to accrue BEE points through the pursuit of objectives like skills development or research and development for Black South Africans.

Minister Patel said the commitment by Microsoft is the largest by any single company under the equity equivalent provisions.

The department will allocate the funds to different initiatives centered on skills development. Around R663 million ($36.5 million) is allocated to an enterprise development initiative for Black-owned technology startups, as well as small businesses that are not in the technology sector but encourage greater use of technologies like AI.

The rest will be spent on a skills development initiative to train 1,000 young people in emerging technologies like AI and data analytics, as well as research and development programs.

Through the Public Sector Workplace Placement program, Microsoft will augment skilled candidates with crucial low code/no code training, empowering them to deliver rapid prototyping and automation capabilities into key government departments.

"Transformative technologies, such as cloud and AI, have the potential to solve some of South Africa's most pressing challenges, while also unlocking opportunities to fuel inclusive, sustainable economic growth," Microsoft Africa President Lillian Barnard said.

Microsoft Africa President Lillian Barnard. (Source: Microsoft)

"This investment represents our commitment to empowering individuals and small businesses to be part of Africa's digital economy, and to drive job creation and growth that will benefit the entire region," Barnard added.

Microsoft's previous African investments

This is not the first time Microsoft has invested in skills development for young people and small businesses in Africa.

In October 2023, Microsoft South Africa also partnered with the Youth Employment Service (YES) to provide AI training to 300,000 unemployed youth in South Africa.

Also in October 2023, Microsoft announced a partnership with M-Pesa Africa to supply digital skills development for small businesses across Kenya, Lesotho, Mozambique, the Democratic Republic of Congo (DRC) and Tanzania.

*Top image is of Malebo Mabitje-Thompson, acting director-general of the Department of Trade, Industry and Competition; Ebrahim Patel, minister of trade, industry and competition; Kalane Rampai, MD of Microsoft South Africa; and Lillian Barnard, president of Microsoft Africa, at the signing ceremony in Johannesburg. (Source: Microsoft South Africa)

— Paula Gilbert, Editor, Connecting Africa