- The fund is as a rebranding of failed programmes with no real change.
- The document lacks details on funding sources, impact, and management.
- Instead, the DA calls for a review of BBBEE, its impact, and a focus on regulatory reform to create a business-friendly environment.
Please find attached a soundbite by Toby Chance MP.
Since the release of the Transformation Fund Concept document by Trade, Industry, and Competition Minister Parks Tau for public comment, critics, analysts, and business leaders have consistently argued that the proposed fund is essentially a rebranding of old programmes that have failed over the years. These initiatives are being presented with new language but offer no real change.
Our position remains clear: Instead of launching another poorly planned fund that is unlikely to address South Africa’s complex economic challenges or benefit the majority of black people, the Minister should initiate a thorough review of BBBEE, its actual impact, and how funding access fits into the broader need for regulatory reform and a business-friendly environment.
The idea of a partnership with the private sector is misleading and fails to convince anyone, including the Democratic Alliance.
The Concept document provides very few details about where the expected R20 billion per year will come from if it relies on voluntary contributions from business and government. It also doesn’t clarify its intended impact or who will be responsible for managing it. Over the past three decades, various funds aimed at supporting black-owned businesses have failed to drive significant economic growth, create new businesses, or generate jobs.
Furthermore, the document vaguely mentions a partnership with the private sector without explaining how it will work. The only concrete detail is that a Board of Directors will be formed, with two private sector representatives appointed by the Minister.
The Department of Trade, Industry, and Competition (DTIC) appears to be committed to its failed BBBEE policies, which have mainly benefited a small group of connected black entrepreneurs rather than encouraging innovation, competitiveness, and the growth of supply chains that could help emerging businesses access global markets.
As a sweetener, donations to the fund will be treated as tax write-offs for businesses. This, however, is a cynical tactic that allows companies to artificially boost their BBBEE scores while providing absolutely no means of monitoring or tracking the real impact these funds will have once they are in government hands.
The Concept document misses the opportunity to address the critical issues that the DTIC should be focusing on: Why do 70% of businesses fail within five years? Why do government funding agencies like the National Empowerment Fund (NEF) and the Small Enterprise Development Agency report loan defaults ranging from 25% to 60%?
Which private sector programmes under Enterprise and Supplier Development are working, and why? How can these successful initiatives be scaled to create more jobs for the millions of unemployed?
Interestingly, the National Empowerment Fund (NEF’s) role in managing the fund, which is to be set up as a special-purpose vehicle, is not mentioned in the Concept document. Yet, the NEF recently projected that its funds under management would increase from R4.6 billion in 2024/25 to R72 billion by 2028/29, with the creation of 700,000 jobs. These projections seem unrealistic, especially in an economy growing at less than 2% per year.
The DA is preparing a detailed response to Minister Tau’s call for comments, which will be submitted before the May 7th deadline.
The DA has a comprehensive plan outlined within our Economic Justice Policy that will address the root causes of inequality of opportunity by utilising the internationally recognised Sustainable Development Goals (SDGs).
This non-racial model will uplift disadvantaged South Africans while preventing the upliftment of already wealthy politically connected elites.