{"id":818441,"date":"2025-03-27T15:00:00","date_gmt":"2025-03-27T13:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=818441"},"modified":"2025-03-27T14:57:22","modified_gmt":"2025-03-27T12:57:22","slug":"r100-billion-black-business-fund-under-siege","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/818441\/r100-billion-black-business-fund-under-siege\/","title":{"rendered":"R100 billion black business fund under siege"},"content":{"rendered":"\n<p>Krutham executive chairman Stuart Theobald says South Africa\u2019s planned R100 billion Transformation Fund is misguided and will not reach its goal.<\/p>\n\n\n\n<p>President Cyril Ramaphosa promoted the controversial R100 billion Transformation Fund during his State of the Nation Address.<\/p>\n\n\n\n<p>\u201cWe will set up a transformation fund worth R20 billion a year over the next five years to fund black-owned and small enterprises,\u201d he said.<\/p>\n\n\n\n<p>On 19 March 2025, Minister of Trade, Industry and Competition Parks Tau published the Draft Transformation Fund concept document for public comment.<\/p>\n\n\n\n<p>The fund wants to aggregate enterprise and supplier development (ESD) funds to support the participation of black-owned enterprises in the economy.<\/p>\n\n\n\n<p>It will provide access to financial and non-financial support for black-owned and managed enterprises, including small, medium, and micro enterprises.<\/p>\n\n\n\n<p>The Draft Transformation Fund document outlines its objectives:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Promote economic transformation to enable meaningful participation of black people in the economy.<\/li>\n\n\n\n<li>Improve access to funding for black-owned and controlled enterprises.<\/li>\n\n\n\n<li>Empower and support black-owned and controlled enterprises\u2019 participation in value chains across key sectors of the economy.<\/li>\n\n\n\n<li>Mobilise financial resources from the private and public sectors using B-BBEE legislation.<\/li>\n<\/ul>\n\n\n\n<p>Tau said there will be no additional requirements for entities beyond those currently in South Africa\u2019s B-BBEE policy.<\/p>\n\n\n\n<p>The B-BBEE policy, through the Codes of Good Practice, requires South African businesses to contribute through Enterprise and Supplier Development (ESD).<\/p>\n\n\n\n<p>This contribution includes giving 3% of net profit after tax (NPAT) to the development of black suppliers, black industrialists and SMMEs.<\/p>\n\n\n\n<p>Tau said the fund will focus on businesses owned by women, youth, and people living with disabilities, especially those based in rural and township areas.<\/p>\n\n\n\n<p>He said they will establish governance structures to ensure accountability to the government and the private sector, transparency, and efficiency in managing the fund.<\/p>\n\n\n\n<p>It is unclear whether the 3% of net profit after tax (NPAT) ESD commitment would still be voluntary or may become compulsory.<\/p>\n\n\n\n<p>There is also uncertainty about the new fund\u2019s impact on current enterprise beneficiaries and supplier development from companies.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">R100 billion black business fund under siege<\/h2>\n\n\n\n<figure class=\"wp-block-image size-full\"><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/10\/Piet-Le-Roux-Presenting-1-scaled-e1697639676438-qle5h1nhe7g5j8oduy298qjtqf9ijazjf58zp5hwfk.jpg\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"600\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/10\/Piet-Le-Roux-Presenting-1-scaled-e1697639676438-qle5h1nhe7g5j8oduy298qjtqf9ijazjf58zp5hwfk.jpg\" alt=\"\" class=\"wp-image-798062\" srcset=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/10\/Piet-Le-Roux-Presenting-1-scaled-e1697639676438-qle5h1nhe7g5j8oduy298qjtqf9ijazjf58zp5hwfk.jpg 1024w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/10\/Piet-Le-Roux-Presenting-1-scaled-e1697639676438-qle5h1nhe7g5j8oduy298qjtqf9ijazjf58zp5hwfk-300x176.jpg 300w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/10\/Piet-Le-Roux-Presenting-1-scaled-e1697639676438-qle5h1nhe7g5j8oduy298qjtqf9ijazjf58zp5hwfk-768x450.jpg 768w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/a><figcaption class=\"wp-element-caption\">Sakeliga CEO Piet Le Roux<\/figcaption><\/figure>\n\n\n\n<p>Toby Chance, the DA\u2019s spokesperson on Trade, Industry, and Competition, said the party rejects the notion that the fund will empower previously disadvantaged South Africans.<\/p>\n\n\n\n<p>Chance said real transformation can only be achieved by focusing on economic growth by reducing the regulatory burden on companies.<\/p>\n\n\n\n<p>He added that the Broad-Based Black Economic Empowerment (B-BBEE) Act and associated regulations have failed to deliver sustainable economic transformation.<\/p>\n\n\n\n<p>\u201cInstead, they have entrenched corruption, patronage, inefficiency and waste and have left millions without work or opportunities to start and grow a business,\u201d he said.<\/p>\n\n\n\n<p>He said their primary concern with the fund is that it will not address the root causes of South Africa\u2019s economic malaise.<\/p>\n\n\n\n<p>Instead, it will perpetuate the same cycle of mismanagement that has led to flatlining economic growth.<\/p>\n\n\n\n<p>South Africa has lost an estimated R1.5 trillion in the past five years due to corruption and inefficient regulations.<\/p>\n\n\n\n<p>\u201cA R100 billion fund will likely lead to further financial waste and political cronyism rather than actual economic empowerment,\u201d he said.<\/p>\n\n\n\n<p>Sakeliga CEO Piet Le Roux also opposed the Transformation Fund, calling it another extortion racket to put money in a government fund.<\/p>\n\n\n\n<p>\u201cThe fund will be a way to siphon money to preferred government associates and preferred political people around the government,\u201d he said.<\/p>\n\n\n\n<p>\u201cIt\u2019s a direct attack on businesses, and it\u2019s going to be very harmful for everyone in this country through a multiplier effect.\u201d<\/p>\n\n\n\n<p>Le Roux said similar legislation has already caused tremendous damage in the public sector, and people must prevent this from happening in the private sector.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Krutham executive chairman Stuart Theobald slates the fund<\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2023\/07\/Stuart-Theobald.png\"><img decoding=\"async\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2023\/07\/Stuart-Theobald-1024x683.png\" alt=\"\" class=\"wp-image-703479\"\/><\/a><figcaption class=\"wp-element-caption\">Krutham executive chairman Stuart Theobald<\/figcaption><\/figure>\n\n\n\n<p>Krutham executive chairman Stuart Theobald <a href=\"https:\/\/omny.fm\/shows\/the-money-show\/transformation-fund-worsens-disease-of-inputitis\">told The Money Show<\/a> that the fund suffers from focusing on the inputs instead of the output.<\/p>\n\n\n\n<p>He said black economic empowerment is a good example of a policy with good intentions that fails to produce the desired outputs.<\/p>\n\n\n\n<p>\u201cIf you look at how BEE is done in practice, it is how much money companies will spend,\u201d Theobald said.<\/p>\n\n\n\n<p>Companies carefully manage how much money they should spend to get the required points on BEE scorecards.<\/p>\n\n\n\n<p>\u201c<strong>Companies are measured by how much money they put in and not by the impact or the desired outcomes<\/strong>,\u201d he said.<\/p>\n\n\n\n<p>He said the R100 billion Transformation Fund, as it has been articulated, is an extreme version of the current black empowerment legislation.<\/p>\n\n\n\n<p>\u201cThe government is talking about spending a lot of money and not about the outcomes or the effect it wants to achieve,\u201d he said.<\/p>\n\n\n\n<p>He added that giving out R20 billion annually to help small and medium-sized businesses scale is a tremendously complicated task.<\/p>\n\n\n\n<p>To put it in perspective, the government wants to give qualifying black businesses R55 million every day for five years.<\/p>\n\n\n\n<p>If the amount is calculated over working days, the government must provide these businesses with R80 million daily.<\/p>\n\n\n\n<p>\u201cNobody who has been involved in enterprise supply and development will see it as remotely possible to deploy this amount of money in the local economy,\u201d he said.<\/p>\n\n\n\n<p>The constraints are not only finding suitable enterprises to give money to. They also include the non-financial support that should accompany it.<\/p>\n\n\n\n<p>\u201cFor small companies to grow and become sustainable, they need mentorship, support, and help to access markets,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Krutham executive chairman Stuart Theobald said South Africa\u2019s planned R100 billion Transformation Fund is misguided and will not reach its goal.<\/p>\n","protected":false},"author":10,"featured_media":807779,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[1293,18412,21981,22136],"class_list":["post-818441","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-cyril-ramaphosa","tag-krutham","tag-r100-billion-transformation-fund","tag-stuart-theobald"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/818441","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=818441"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/818441\/revisions"}],"predecessor-version":[{"id":818474,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/818441\/revisions\/818474"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/807779"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=818441"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=818441"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=818441"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}