R100 billion fund for black businesses in South Africa here soon

The Minister of Trade, Industry, and Competition, Parks Tau, said the new R100 billion Transformation Fund will give black-owned enterprises access to funding.

He provided details about the Transformation Fund in response to a parliamentary question from Thokozani Makhosonke Langa.

The R100 billion fund rose to prominence last year after Toby Chance, DA spokesperson on trade, industry, and competition, sounded the alarm about the new fund.

Chance warned that the R100 billion transformation fund risks being a slush fund and is open to abuse by connected politicians.

He likened it to South Africa’s R500 billion coronavirus funding, which was rife with corruption, fraud, and looting.

“Not only does the DA reject race-based legislation, but BBBEE has proven counterproductive in closing our inequality gap,” Chance said.

He added that most black empowerment funding does not stimulate high-growth enterprises in South Africa.

Another controversial part of the R100 billion transformation fund is how it will be funded, considering businesses are already overtaxed.

Tau wants South African businesses to pay 3% of their annual net profit after tax for a new R100 billion transformation fund.

In response to Chance’s question, Tau told parliament that money for the fund would be raised according to the BBBEE codes of good practice.

Another funding source will come through the Competition Commission’s public interest participation.

“Entities are obliged under the BBBEE codes of good practice to contribute an equivalent of 3% of annual net profit after tax for the development of black suppliers,” Tau said.

“Entities will be required to contribute to the transformation fund for compliance with the enterprise and supplier development element.”

He explained that the BBBEE codes of good practice make provision for multinational entities to comply with ownership elements.

This includes setting aside funds, 25% of the value of their South African operations, for transformation purposes.

“Therefore, funds from the equity equivalent investment programme will form part of the transformation fund,” Tau said.

President Cyril Ramaphosa promoted the controversial R100 billion black economic empowerment fund during his State of the Nation Address.

“We will set up a transformation fund worth R20 billion a year over the next five years to fund black-owned and small enterprises,” he said.

R100 billion Transformation Fund details

Langa asked Minister Parks Tau for a detailed breakdown of the R100 billion Transformation Fund and how he will ensure the money reaches the intended beneficiaries.

Tau responded, saying the fund will be administered through a partnership between the private and public sectors.

He added that the Transformation Fund will have a governance structure consisting of a board and oversight committees.

The Minister explained that Section 9(2) of the Constitution places a collective burden on all to advocate for equality and redress.

He said the constitutional undertaking is given legislative impetus through Section 2(h) of the B-BBEE Act.

This obliges the government to “increase the effective economic participation of black-owned and managed enterprises”.

He added that it includes small, medium and micro enterprises and co-operatives and enhance their access to financial and non-financial support.

“The Transformation Fund is established to address access to funding for black-owned enterprises and SMMEs,” Tau said.

“This will increase their economic participation and income-earning potential in line with the Constitution.”

It will be achieved by aggregating various funds, such as the Enterprise and Supplier Development contributions and the Equity Equivalent Investment Programme.

R500 million fund to support and assist spaza shops in rural areas

The R100 billion Transformation Fund is not the only initiative to assist black businesses in South Africa.

On 3 March 2025, the Minister of Small Business Development, Stella Ndabeni-Abrahams, launched a R500 million fund to support spaza shops in rural areas.

Ndabeni-Abrahams said the Spaza Shop Support Fund will bolster the competitiveness of spaza shops and help them compete with larger retailers.

She explained that the fund will provide financial and operational support to township convenience stores.

“The fund will be launched in the next two weeks, and the exact date will be communicated,” she stated.

The initiative will be jointly funded by the Department of Small Business Development (R150 million) and the Department of Trade, Industry and Competition (R350 million).

“The fund aims to boost economies of scale by linking spaza shops and food-handling outlets with buying groups for bulk purchasing,” she said.

“It will strengthen business operations through training and support, improving their overall market competitiveness.”

She told parliament that the R500 million had not yet been disbursed because Spaza Shops first had to be registered.

The registration process, which ended on 28 February 2025, helped to determine the extent and type of support required by their owners.

“This information was essential to design appropriate support mechanisms tailored to their needs,” she said.

Now that the registration process has been completed, the fund will soon be open for applications.