Government ‘clarifies’ new R100 billion BEE fund for South Africa

 ·24 Jan 2025

The Department of Trade, Industry and Competition (DTIC) has attempted to ‘contextualise’ the objectives of the highly controversial Transformation Fund.

The DTIC previously outlined the plan to create a R100 billion Transformation Fund to support black-owned businesses and Small, Medium, and Micro Enterprises (SMMEs).

This would be funded through private sector profits.

The new fund drew widespread criticism from the Democratic Alliance, a key member of the Government of National Unity, who rejected the plan outright.

In response, the DTIC said that the new fund is a critical initiative that advances South Africa’s constitutional commitment to economic redress and inclusive growth.

The department said the proposed fund is rooted in Section 9(2) of the Constitution and aims to promote shared equality through legislative and other measures to empower black-owned SMMEs.

It added that the fund also reflects the intent of the GNU to boost economic growth.

“The GNU’s transformative agenda seeks to dismantle systemic barriers to economic participation, ensuring that historically disadvantaged communities are afforded equal opportunities to thrive in all sectors of society,” said the DTIC.

It added that the Fund is anchored in the B-BBEE Act, which obligates the government to increase the economic participation of black-owned and managed enterprises, such as SMMEs.

It said that the fund will directly address these priorities while “promoting greater compliance with B-BBEE requirements and unlocking opportunities for sustainable growth”.

The department said that the objections to the transformation fund include the following:

  • Promotes Economic Inclusion: Provides financial and non-financial support to black-owned enterprises, ensuring meaningful participation in the economy.

  • Addresses Fragmentation: Aggregates resources from existing Enterprise and Supplier Development (ESD) obligations and other sources to enhance impact and efficiency.

  • Fosters Sectoral Growth: Focuses on high-impact sectors, including agriculture, tourism, ICT, manufacturing, and businesses in township and rural areas.

  • Enhances Market Access: Offers technical assistance, pre- and post-investment support, and market access opportunities to beneficiaries.

  • Supports Industrialization: Aligns with South Africa’s industrial policy to stimulate growth in productive sectors and underdeveloped areas.”

Minister of Trade, Industry and Competition Parks Tau said the fund is not about imposing new obligations.

“It is about ensuring that existing commitments under the B-BBEE legislation are strategically utilised to create meaningful economic transformation,” said Tau.

“It embodies our constitutional mandate to achieve equality and empower historically disadvantaged communities.”

As per the Department’s revised Annual Performance Plans, the fund’s conceptual framework will also be opened for public consultation and stakeholder engagement.

It hopes to mobilize R100 billion by 2029.

The department added that it welcomes the ongoing debate on transformation and looks forward to broad participation during the consultation process.

“The Transformation Fund is not merely a funding mechanism, it is a catalyst for change,” said Tau.

“Through collaboration with the private sector, civil society, and other stakeholders, we will create an economy that is inclusive, sustainable, and reflective of South Africa’s diversity.”

Minister of Trade, Industry and Competition Parks Tau
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