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The National Empowerment Fund (NEF) wants deep-pocketed South Africans, including black entrepreneurs who have benefited from empowerment laws, to fund its efforts to broaden economic participation.
The NEF, which was formed nearly three decades ago to increase participation by black South Africans in the economy, is looking to put together a fundraising panel that will, among other things, tap high-net-worth individuals and philanthropists to fill its coffers.
The fundraising panel will also target family offices to raise the needed capital.
The NEF told Business Times that the request for proposal it issued this week was not a departure from its historical approach but rather the formalisation and scaling of fundraising activities that have long included partnerships and co-funding arrangements.
“The panel will comprise service providers with expertise in mobilising capital from a broad spectrum of potential funding partners, including development finance institutions, commercial banks, institutional investors, corporate investment vehicles, foundations, family offices and philanthropists,” said NEF spokesperson Dikatso Mothae.
“Broadening the NEF’s funding base will enhance its ability to finance black-owned and black-managed enterprises while delivering measurable developmental outcomes. These include supporting enterprise growth, creating and sustaining jobs, expanding opportunities for young people and women entrepreneurs, supporting persons with disabilities, and advancing inclusive economic participation.”
Funding black economic empowerment has been a thorny issue in South Africa over the years.
The department of trade, industry & competition (DTIC), which the NEF reports to, has proposed a partnership with the private sector to establish a R100bn aggregated fund to support the ever-growing funding requirements for businesses owned and managed by black entrepreneurs and propel inclusive growth across various sectors of the economy.
The Transformation Fund is anticipated to be capitalised at R20bn per annum over a five-year period.
Business Times last month reported that Kuben Naidoo, appointed by President Cyril Ramaphosa to his presidential economic advisory council in 2024, earlier this year proposed a simple, voluntary tax surcharge in return for a “BEE compliance certificate”.
Under Naidoo’s proposal, a company could voluntarily pay a 5% surcharge on its corporate income tax. This surcharge would not be tax deductible. Simply put, if a company is assessed as having to pay R100 in corporate income tax, it would voluntarily pay R105. “This proposal has several advantages: there is no need for complex tax calculations. Second, if a company makes a loss, there is no tax to pay.
“Small businesses often have a lower effective tax rate and will pay proportionately less. Companies typically pay little tax during their start-up investment phase,” Naidoo wrote in notes prepared ahead of this year’s State of the Nation Address.
Tech entrepreneur Alan Knott-Craig Jnr has called for companies to pay 3% of gross revenue in exchange for automatic level 3 broad-based BEE status — a neat alternative to the complex scorecard system.
The B-BBEE Commission convened a stakeholders’ dialogue this week, which it used to release a research report that looked at the transformational landscape from 2013 to 2023.
The research was conducted in collaboration with the Competition Commission, the Presidential B-BBEE Advisory Council, the DTIC and the South African National Accreditation System.
The report found that despite progress, transformation had not progressed evenly across all elements of the scorecard.
Transformation at the board and top management level remained particularly slow, showing little improvement over the 10-year period. Although black women’s ownership exceeded the minimum target of 10%, it remained modest at 13.6% in 2023.
The report also found that economic interest for black shareholders consistently outperformed voting rights, suggesting that while ownership has increased, black shareholders do not always enjoy proportional influence in corporate decision-making.
“This report confirms that South Africa has made measurable progress in implementing B-BBEE over the past decade, while also reminding us that transformation is an ongoing national project,” Tshediso Matona, commissioner of the B-BBEE Commission, said.
“The findings show that B-BBEE has become embedded in the governance and business practices of many organisations, but they also highlight areas where greater ambition and collective action are required. Our responsibility now is to build on the progress achieved, strengthen implementation, improve the evidence base and refine the policy framework so that economic transformation delivers broader, deeper and more inclusive participation in the economy.
“This report should therefore be viewed not only as a reflection on where we have come from, but as a roadmap for the next phase of South Africa’s transformation journey.”
Business Times
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