The Department of Trade, Industry, and Competition (DTI) has proposed a R100 billion Transformation Fund, aiming to uplift black-owned businesses and small, medium, and micro-enterprises (SMMEs).
DTI’s black transformation fund ruffles feathers in the private sector
The fund, to be managed by the National Empowerment Fund (NEF) and financed through Broad-Based Black Economic Empowerment (BBBEE) codes and the Competition Commission’s public interest requirements, has sparked outrage in the private sector.
Trade, Industry, and Competition Minister Parks Tau unveiled the initiative during the DTI’s 2024-2025 Annual Performance Plan presentation, in October 2024.
He emphasised the fund as a catalyst for economic transformation and industrialisation, focusing on addressing funding gaps for black entrepreneurs and ensuring more equitable economic participation.
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Critics, including the Democratic Alliance (DA), argue that the fund risks becoming a mismanaged “slush fund.”
The DA maintains that resources should be allocated based on business merit and growth potential, rather than race-based criteria.
“It remains to be seen how it will accomplish this, in view of the fact that companies make their own decisions on how ESD spending is channelled,” the party wrote in a statement, in November 2024.
The party also expressed concerns about the fund’s dependency on private sector compliance, citing uncertainty over whether enterprise and supplier development (ESD) contributions will be channelled as intended.
“The DA will closely monitor the rollout of these funds in this Parliament and ensure that they deliver sustainable economic growth and job creation for all.”
What you must know about the fund
The Transformation Fund aims to reinvigorate BBBEE efforts, particularly in critical sectors like manufacturing and technology.
By the end of 2024-2025, the DTI expects to raise R10 billion, with an eventual goal of R100 billion, to create 200,000 jobs and achieve 30% black ownership in targeted industries.
The fund’s rollout will include grants, equity, and loans.
Collaboration between the NEF and the BBBEE Commission formalised in a Memorandum of Agreement (MoA) signed last month, is expected to streamline compliance monitoring and resource sharing.
Key stakeholders will include private enterprises and government entities, which will contribute through existing BBBEE mandates.
Minister Tau has defended the initiative, highlighting its alignment with broader goals to stimulate inclusive growth and improve economic stability.
“These interventions are not about charity,” Tau stated.
“Economic growth is sustained by a working-age population that earns and spends on domestically manufactured goods.”
While proponents argue that the fund will address systemic inequities and unlock economic potential, detractors point to challenges in implementation and accountability.
Industry observers remain sceptical about the practicality of raising R100 billion through private sector contributions, with some warning of possible misuse of funds and inefficiencies.
