South Africa has moved closer to launching a R100 billion ($6.3 billion) state-linked fund designed to expand support for Black-owned and Black-managed businesses, after the government published draft amendments to its empowerment rules.
On Thursday, Trade, Industry and Competition Minister Parks Tau released proposed changes to the Broad-Based Black Economic Empowerment (BEE) Codes of Good Practice, setting the stage for the creation of a Transformation Fund that companies would finance. The government has opened a 60-day public comment period on the amendments.
Under the proposal, companies would gain an alternative way to meet part of their enterprise and supplier development (ESD) obligations. Firms currently spend 3% of net profit after tax on ESD programmes. Instead, they could channel some of those funds into the Transformation Fund, which the state would deploy to support Black-owned businesses at scale.
The government argues that pooling resources will improve efficiency and accelerate economic inclusion. It believes the fund will deliver broader impact than fragmented company-led projects.
However, the plan has drawn criticism from opposition parties and business groups. Last year, the Democratic Alliance (DA) warned that the fund could suffer from weak oversight. Trade spokesman Toby Chance said the proposal risked becoming a drain on resources without clear outcomes.
Despite the criticism, the African National Congress (ANC) continues to defend empowerment legislation as central to correcting the economic inequalities created under apartheid. The party has made transformation policy a cornerstone of its economic agenda.
Following the 2024 national elections, the ANC formed a coalition government with the DA and smaller parties after failing to secure an outright majority for the first time since the end of white-minority rule in 1994.
Economic pressures have intensified the debate. South Africa’s economy has grown at less than 1% a year on average for the past decade, while unemployment remains among the highest globally. Corruption and policy uncertainty have also weakened investor confidence.
Business groups have voiced concern over state control of the proposed fund. The National Employers’ Association of South Africa, which represents about 8,000 employers, previously described the plan as misguided and questioned the government’s capacity to manage such a large pool of capital.
Once the public consultation period ends, the Department of Trade, Industry and Competition will review submissions before finalising and publishing the amended BEE codes for implementation.
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If approved, the Transformation Fund would rank among the largest empowerment financing initiatives in South Africa’s history.
