The government has reaffirmed its plan to establish a R100 billion Transformation Fund to direct large-scale financial and developmental support to black-owned businesses over the next five years.
The Department of Trade, Industry, and Competition (DTIC), under Minister Parks Tau, noted that it has established a revised proposal for the fund.
The new version provides better assurances of accountability and highlights that companies will be able to earn scorecard points for enterprise and supplier development by contributing to the fund.
On 19 March 2025, Minister of Trade, Industry and Competition Parks Tau published the Draft Transformation Fund concept document for public comment. The plan effectively allocates roughly R20 billion a year to black-owned enterprises.
This amounts to approximately R55 million per day for five years, or around R80 million per working day, to support the development and participation of black businesses in key sectors of the economy.
The fund plans to bring together enterprise and supplier development (ESD) contributions that companies already make under South Africa’s Broad-Based Black Economic Empowerment (B-BBEE) codes.
The DTIC emphasised that this is not an additional requirement for companies but a restructuring of how existing obligations are managed.
Under the current policy, South African firms are expected to spend 3% of their net profit after tax on developing black suppliers, black industrialists, and small and medium enterprises.
Tau argued that the Transformation Fund will streamline these contributions and create a more coordinated system to provide both financial and non-financial support, such as mentoring, market access, and capacity building.
The draft concept document outlines several key objectives: improving access to funding for black-owned and controlled enterprises, promoting their participation in economic value chains, and mobilising both public and private resources to support greater black economic inclusion.
The DTIC framed the fund as a necessary intervention to close persistent gaps preventing black entrepreneurs from scaling beyond early-stage development.
Still not convinced
However, the proposal has attracted significant criticism. Toby Chance, the DA’s spokesperson on trade and industry, argued that the fund does not address the deeper structural problems inhibiting growth, such as policy instability, low investor confidence, and an unreliable energy supply.
Krutham executive chair Stuart Theobald has also questioned the feasibility of deploying R20 billion a year in a productive and sustainable way.
He noted that no previous enterprise development initiative has come close to operating at this scale, warning that the government appears more focused on the size of the spending than the measurable outcomes.
“The government is talking about spending a lot of money and not about the outcomes or the effect it wants to achieve,” he said, adding that disbursing R55 million a day into viable businesses is “not remotely possible” under current market conditions.
In response, the revised proposal introduced more extensive governance mechanisms. The fund will be overseen by an independent board consisting of both public and private sector representatives, with private sector members selecting their own directors.
Investment committees will operate independently, performance-based incentives will be applied to management, and results will be published openly.
A multi-stakeholder oversight council representing government, business, labour, and civil society will provide additional scrutiny.
The DTIC argued that this structure aligns the fund with international best practices in transparency. Another major change is the incentive structure for companies participating in the fund.
Firms will earn enterprise and supplier development points on the BEE scorecard immediately in the year contributions are made, removing the administrative burden of running their own ESD programmes.
Research by the BEE Commission showed that only around 61% of companies currently meet their ESD targets, and many lack a clear strategy or way to measure impact.
By centralising contributions, the government argued that funds can be deployed more effectively. However, not all observers are convinced that the revised model solves the fundamental issues.
Hiten Keshave, CEO of Unconventional CA, warned that centralising transformation again risks creating an elite circle of beneficiaries rather than building broad-based development.
He argued that real transformation requires corporations to actively nurture suppliers within their value chains and that outsourcing this responsibility to a fund reinforces a compliance mindset instead of a development one.
Without alignment to global sustainability and ESG frameworks, he warned, the initiative risks appearing progressive while producing little to no practical change.
