Cape Town – The newly announced R100 billion Transformation Fund aims to boost black economic participation but faces criticism over potential corruption risks.
Unveiled by Trade, Industry and Competition Minister Parks Tau on 19 March 2025, the fund seeks to pool Enterprise and Supplier Development (ESD) contributions from both the private and public sectors. It is designed to support black-owned businesses, with a particular focus on women, youth, and disabled entrepreneurs in rural and township areas.
“The imperative is to transform the economy through increased participation of previously disadvantaged groups in the mainstream economy, which remains relevant for economic redistribution and the changing patterns of ownership of the means of production,” Tau said
An estimated R100 billion is expected to be raised over the current administration’s term through a collaborative effort between the government and the private sector.
Trade, Industry and Competition @the_dtic Minister Parks Tau has published the Draft Transformation Fund concept document for a 30-day public commentary period. https://t.co/s4D0N4XPKq#GovZAUpdates
— @SAgovnews (@SAgovnews) March 20, 2025
“We firmly are in pursuit to transform the economy, as guided by the Vision 2030 of the National Development Plan, which is to eliminate poverty and reduce inequality. Our Constitutional imperative places a collective burden on all of us to advocate for equality and redress,” the minister said.
President Cyril Ramaphosa endorsed the initiative in his State of the Nation Address.
“We will set up a transformation fund worth R20 billion a year over the next five years to fund black-owned and small enterprises,” he said, according to Daily Investor.
This means the government wants to give qualifying black businesses R55 million every day for five years.
However, critics, including the DA’s Toby Chance, argue that such a massive fund is prone to mismanagement and political exploitation. They have drawn comparisons to the controversial R500 billion Covid-19 relief fund, which was marred by corruption, the report said.
Despite Tau’s assurances of robust governance structures to ensure transparency and accountability, concerns persist that the fund could become a tool for political cronyism rather than genuine economic transformation.
The Freedom Front Plus likened the initiative to the Roman Catholic practice of selling indulgences in the fifteenth century, where congregants could buy absolution while the church profited.
The Minister of Trade, Industry and Competition, Mr Parks Tau, has published a Draft Transformation Fund concept document for commentary.https://t.co/6yFXM90tDO
— VRYHEIDSFRONT PLUS (@VFPlus) March 26, 2025
“The document’s hypothesis is that after all these years of Black Economic Empowerment (BEE)—first introduced in 2003 and revised in 2013—black people’s share in the economy is still too small,” the party said in a statement.
“The solution proposed is for the government to establish a fund to help black-owned enterprises successfully participate in the economy as suppliers of goods and services.”
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Compiled by Betha Madhomu
