Trade, industry & competition minister Parks Tau has published a 26-page draft concept document for the R100bn Transformation Fund for public comment within 30 days.
Establishment of the fund that aims to gather R100bn from the public and private sectors by 2029 was announced by Tau towards the end of last year in parliament. It is strongly opposed by both the DA and Business Unity SA (Busa).
Parks said in a statement on Wednesday that the aim of the fund was to aggregate enterprise and supplier development (ESD) funds in support of transformation and the participation of black-owned enterprises in the economy.
The fund, working with the private sector, would enhance the access of black-owned and managed enterprises to financial and non-financial support in line with the requirement of the Broad-based BEE Act.
Tau stressed once again in the statement that the requirements of the fund would not impose additional requirements for entities over and above what now exists in the BBBEE policy. This requires through its codes of good practice that entities must contribute 3% of net profit after tax to enterprise and supplier development.
Businesses will be required to contribute to the Transformation Fund to comply with the ESD element of the codes.
“We would like to see much more impact and spending on relevant ESD activities”, Tau said.
He added that particular attention would be given to businesses owned by women, youth and people living with disabilities, especially those based in rural and township areas.
“We will be establishing a special purpose vehicle that will have accountability to an oversight committee and a board with required skills and capacity,” Tau noted.
Busa CEO Khulekani Mathe has expressed strong opposition to the proposed fund, saying it is “ill-advised”. He argued that BEE was designed to give firms the discretion to decide how they supported enterprises and suppliers in their supply chains, rather than mandating contributions to a fund. He said Busa would not allow the proposal to proceed without a challenge.
Both Busa and DA spokesperson on trade, industry & competition Toby Chance have expressed concerns about the potential for corruption and mismanagement within the fund.
Writing in Business Day, Chance said the fund threatened to undo the ESD support many thousands of existing black businesses depended on.
“The ANC’s plan to centralise ESD spend in a government-controlled pool will disrupt this system. Black suppliers who now receive direct, industry-specific support will be forced to navigate a slow, bureaucratic and politicised process to access essential resources. No government can possibly know the strategic supply needs of a myriad complex industries.
Large-scale failure is inevitable,” Chance wrote.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.