South Africa’s latest attempt to reshape its unequal economy has produced the proposed R100bn Transformation Fund, officially introduced last week by Deputy President Paul Mashatile, with the government aiming to have it operational by the end of this year.
It aims to accelerate BEE, and Parks Tau, the minister of trade, industry & competition, is now criss-crossing the country to gather support for it. However, beyond the political fanfare, a critical question lingers: will the people the fund is meant to serve, especially small and medium enterprises, have a real say?
Anticipated to be fully capitalised by 2029, just in time for the next general election no less, the fund is being positioned as a new pillar in the government’s effort to advance broad-based black BEE. There’s no question that South Africa needs transformation. The stark inequalities in income, employment and property ownership remain deeply racialised. To deny this is to ignore the daily lived experiences of millions of black South Africans.
Yet as we debate the merit and mechanics of the fund, it’s clear that the dominant voices in the room belong to big business and political leaders. The intended beneficiaries (small businesses and entrepreneurs hustling in townships and rural areas) have been sidelined from the process by not being seated at the table.
This is not a small oversight. At its core, the fund will provide support to township and rural enterprises. But how can these businesses be expected to benefit if they haven’t been actively involved in shaping the fund’s design, governance and implementation? We cannot afford to repeat the mistakes of the past, where policy is drafted in boardrooms and fails to deliver.
There are already warning signs. The draft document lacks key implementation details. What are the targets and success metrics? What governance mechanisms will prevent abuse? And what has led to the failure of the previous government interventions? These are crucial questions, particularly in a country still haunted by the failures of state capture and the weak follow-through on the Zondo commission’s recommendations.
The elephant in the room is public trust. Right now, it’s in short supply. Business leaders are openly questioning whether the fund will be insulated from corruption or mismanagement. And who can blame them? According to Transparency International’s 2024 Corruption Perceptions Index, South Africa ranks 82nd out of 180 countries, and the government’s credibility has been undermined by inconsistent implementation and poor communication around previous transformation interventions such as the Black Industrialist Programme.
The message to entrepreneurs is clear: get involved, engage with the draft and help define the transformation you want to see
In blunt terms, people want to know whether this fund will be effective or whether the money will disappear.But perhaps the more urgent question is whether it will be relevant. If SMEs don’t shape the solution, we risk building a top-down structure that misses the mark.
Take enterprise and supplier development initiatives, for instance. Many SMEs join these programmes hoping for funding and access to market opportunities. What they often find instead is a never-ending cycle of training sessions, coaching, and mentorship, without actual business being done. Yes, business development support has its place, but the fatigue among entrepreneurs is real. They are tired of sitting in lecture rooms while their cash flow dries up.
There is clearly a disconnect between what funders and sponsors think SMEs need and what entrepreneurs are actually asking for. That gap can only be closed if SMEs themselves are at the decision-making table.
The draft Transformation Fund is now open for public comment until the end of May. This is a crucial opportunity for entrepreneurs in every province, especially those in underserved rural and township economies, to make their voices heard. We must not let political leaders alone dictate the terms of transformation. If we do, we’ll be stuck singing the same tune about empty promises for years to come.
The message to entrepreneurs is clear: get involved, engage with the draft and help define the transformation you want to see. If SMEs don’t drive the direction of this fund, someone else will, and it may not be in their best interest.
• Mtwentwe AGA(SA) is MD of Vantage Advisory and host of the SAICABiz Impact Podcast.
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