Is a controversial South African Transformation Fund for black-owned small enterprises really going to boost the economy? During his 2025 State of the Nation (SONA) address, President Ramaphosa promoted a broad-based black-empowerment transformation fund worth R20 billion over five years (R100 billion in total).
However, South African business is questioning whether such a transformation fund is misguided. This follows the Minister of Trade, Industry and Competition Parks Tau publishing the draft Transformation Fund for public comment last month, reports BusinessTech.
BLACK-EMPOWERMENT TRANSFORMATION FUND
Elon Musk notoriously declared he would not invest into the county of his birth until South Africa’s draconian BEE laws are repealed. SA business has long said BEE is a major deterrent to foreign investment. In brief, BEE aims to promote black South African participation in the economy by requiring foreign companies to have a certain level of black ownership. These levels vary against a scorecard that includes equity ownership, management control, skills and socio-economic development.
Nevertheless, because of this lack of foreign investment, a new transformation fund hopes to aggregate Enterprise and Supplier Development (ESD). Its remit includes:
- Promotion of economic transformation for black people in the economy.
- Improved access to funding for black-owned and controlled enterprises.
- Support of black-owned enterprises in value chains across the economy.
- Financial resources for private and public sector B-BBEE legislation.
WHAT ABOUT THE PREVIOUSLY DISADVANTAGED?
However, Toby Chance (DA) rejects the notion that the transformation fund will empower previously disadvantaged black South Africans. Chance believes real transformation will only be achieved when the regulatory burden on companies is reduced. And that Broad-Based Black Economic Empowerment has failed to deliver any significant economic transformation.
“On the contrary, systems like it have entrenched corruption, inefficiency and waste. And have left millions jobless as taxpayer money is squandered. Therefore, the proposed R100-billion transformation fund will merely perpetuate the cycle of mismanagement and continue to flatline the economy. Such a fund will be a way to siphon money to preferred government/political associates. Time and again, black economic empowerment has proven that a good policy with good intentions can still fail to produce the desired outputs,” concludes Chance.
DO YOU THINK BEE IS HELPING OR HURTING THE ECONOMY?
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