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South Africa is nearing the start of a R100 billion ($6.3 billion) state-linked fund to promote Black-economic empowerment that companies will bankroll.<\/p>\n
Trade, Industry and Competition Minister Parks Tau proposed changes to so-called codes of good practice on BEE that will support the creation of a Transformation Fund to pool money that the state plans to use to support Black-owned and managed businesses, according to draft rules published Thursday. The public has 60 days to comment on the amendments.<\/p>\n
Firms are currently required to spend 3% of net profit after tax on enterprise and supplier development, and the changes will offer an alternative option for meeting part of this ESD requirement. Instead of companies running their own ESD projects, the fund would collect the money and direct it to Black-owned businesses at scale.<\/p>\n
Read: New BEE incentives as transformation fund is revamped<\/p>\n
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South Africa\u2019s second-biggest party, the Democratic Alliance, last year criticised Tau\u2019s plan, with trade spokesman Toby Chance saying the fund \u201ccould very easily become a bottomless pit for taxpayers\u2019 money, with little to no oversight or meaningful outcomes.\u201d<\/p>\n
The African National Congress, of which Tau is a member, has made empowerment laws a cornerstone of its economic policy to address the injustices of the country\u2019s past. The ANC \u2014 which had previously won a majority in all votes since the end of White-minority rule in 1994 \u2014 formed a coalition government with the DA and other smaller parties after elections in 2024 failed to produce an outright winner.<\/p>\n
Economic growth that hasn\u2019t exceeded 1% annually for the past decade, together with high joblessness, have plagued Africa\u2019s most-industrialised nation as corruption deterred investors.<\/p>\n
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Read: New transformation fund, foot-and-mouth response council, and can Eskom and Transnet survive<\/p>\n
The National Employers\u2019 Association of South Africa, a lobby group representing 8 000 members, last year called the plan misguided and said it was \u201cextremely concerned\u201d about the government managing the funds.<\/p>\n
Once the trade ministry has considered public comments, it will review the draft rules and then publish the codes for implementation.<\/p>\n
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