ITWeb news editor Admire Moyo.
While South Africa continues to walk a diplomatic tight rope with the US, American tech giants are continuing to make solid investments in Africa’s biggest economy.
South Africa’s relationship with the US reached a new low last week, when the US State Department in Washington expelled South African ambassador to the US, Ebrahim Rasool, for allegedly launching a “diplomatic attack on the US that could not be ignored”.
On Friday, US secretary of state Marco Rubio declared Rasool “persona non grata” after remarks he made regarding the Trump administration during a discussion.
The diplomatic tiff set off after the inauguration of US president Donald Trump, when he threatened to halt funding to SA for allegedly “confiscating land and treating certain classes of people very badly”.
In February, Rubio announced he would not attend the G20 Summit in SA, saying: “SA is doing very bad things…My job is to advance America’s national interests, not waste taxpayer money or coddle anti-Americanism.”
According to the Office of the US Trade Representative, US total goods trade with SA stood at $20.5 billion (R372 billion) in 2024. It notes that US goods exports to SA in 2024 totalled $5.8 billion (R105 billion), down 18.3% from 2023.
US goods imports from SA in 2024 were $14.7 billion (R277 billion), up 4.9% from 2023, it adds.
Amid the diplomatic tiff with the Trump administration, technology giants, such as Microsoft and Google, still see an opportunity in SA − the most developed country on the continent.
As the continent’s largest economy, SA presents significant market opportunities for both companies, particularly in cloud services and artificial intelligence (AI) development.
A leading economic hub on the continent, SA serves as a gateway for trade, investment and business operations across the region.
This week, US-based internet search giant Google, whose parent company Alphabet is valued at $2 trillion (R36 trillion), announced it has invested a “significant amount” in its Johannesburg-based cloud region, to support local enterprises and SMEs.
The local Google Cloud region directly supports African businesses and multinational corporations operating on the African continent by providing access to technologies such as AI, machine learning, data analytics and security.
The latest round of investment forms part of Google’s commitment to invest $1 billion over five years, to boost Africa’s digital transformation. Its investment was first announced in 2021.
Previous Google investments in SA include its 2022 landing of the Equiano subsea internet cable, with expectations that it would be a job creation machine, driven by the expansion of the region’s digital economy and peripheral sectors.
Google did not divulge how much in total it is pumping into the country. However, its rival Microsoft, valued at $2.8 trillion (R52 trillion), this month announced plans to invest R5.4 billion over the next two years, to expand its cloud and AI infrastructure in SA, to meet the growing demand for Azure services in the region.
This investment builds on the company’s R20.4 billion investment over the past three years, to establish the country’s first data centres in Johannesburg and Cape Town.
This round of investment, it says, will enable a range of local organisations − from start-ups to large multinationals and government entities − to access the cloud and AI solutions to improve operational efficiency and productivity, and drive innovation across the South African economy.
Microsoft and Google’s continued investments in SA build on their long-term commitments in the local economy.
However, the country is still waiting for US-based SpaceX to launch its Starlink satellite internet service locally.
Trump ally, South African-born Elon Musk, who heads SpaceX, has reservations about launching Starlink locally.
Although Starlink is available in Botswana, Mozambique, Nigeria and Zambia, South Africans have been waiting for the service since 2021. Starlink’s online coverage map shows the date for the service’s availability in the country as “unknown”.
To operate legally in the country, companies like Starlink need to obtain the necessary licences and permissions.
Calling South African laws “racist”, Musk is against the requirement that SpaceX must be 30% owned by historically disadvantaged groups in the African nation, and his rejection of this requirement solicited mixed reactions in the country.
Despite ongoing diplomatic tensions between SA and the US, particularly under the Trump administration, American tech companies continue to see the country as a prime investment opportunity due to its status as Africa’s largest economy and its growing digital market.
Google and Microsoft’s sustained investments in cloud services and AI infrastructure highlight SA’s strategic importance to these tech giants.
However, the delay in Starlink’s launch due to regulatory challenges underscores the complexities of navigating SA’s legal and economic landscape.
While political relations with theUS remain tense, the continued investment in Africa’s digital transformationsignals that, for US tech giants, economic interests outweigh diplomaticdifferences.
These companies understand their success in SA – and in Africa more broadly – requires building local infrastructure, contributing to job creation and fostering innovation.
