Trade, industry & competition minister, Parks Tau says the establishment of a R100bn Transformation Fund would complement existing broad-based BEE (BBBEE) requirements, rather than adding to them.
The fund, will be governed by a public-private partnership, aims to support black-owned enterprises through debt financing, grants, and equity instruments. Sectors targeted include renewable energy, mining services, agro-processing, information & communication technology, infrastructure, manufacturing, and services.
It will combine money spent by listed firms, state companies and private businesses on enterprise and supplier development, as well as funds from multinationals used for BBBEE compliance, without requiring them to sell stakes in their businesses.
The draft Transformation Fund concept document has been published for public comment until May 28.
“Let me stress that the Transformation Fund does not replace any well-functioning vehicles already in place. Instead, it seeks to amplify what is already required under existing BBBEE legislation,” Tau told reporters on Wednesday.
“It is further grounded in our constitution, specifically Section 9(2), which affirms the need for legislative and other measures to advance those disadvantaged by unfair discrimination.”
The fund has been criticised by organised business including Business Leadership SA, which has said it would replicate the functions of existing entities such as Khula Enterprise Finance, the Industrial Development Corporation and the National Empowerment Fund.
“The BBBEE Commission report suggests that there are significant areas that require us to work with business, and we’re not going to come wielding a big stick ... rather, we are saying: ‘Let’s have a process of collaboration that says we have all not done well so far, let us work together to improve’,” Tau said.
Concern has also been raised about the possibility of corruption within the fund, but Simphiwe Hamilton, the department’s director-general sought to allay such fears.
“It is a genuine concern, but we believe that the structuring that will be done in this regard will mitigate against any possibility of malfeasance, and it’s good that we start with that lens right from the beginning,” he said.
The fund aims to invest R20bn a year over five years through a mix of grants, loans and equity, backed by technical support and programmes to help businesses grow and access markets.
“In particular, we are designing the Transformation Fund to ensure good governance, transparency and accountability through the establishment of a special purpose vehicle, which will report to an oversight committee and a board comprised of individuals with the necessary technical and sectoral expertise,” Tau said.
The funds raised would be administered by the special purpose vehicle, which would report to the B-BBEE Commission and parliament.
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