Parliament,Tuesday, 3 June 2025 – The Portfolio Committee on Trade, Industry and Competition met with the Department of Trade, Industry and Competition (DTIC) to discuss the rationale for and mechanisms to operationalise the R100 billion Transformation Fund.
The DTIC informed the committee that the purpose of the Transformation Fund is to give effect to Section 9(2) of the Constitution which calls for redress and equality. Section 11(2)(b) of the B-BBEE Act (Act No. 53 of 2003), as amended, gives effect to this provision. The Act provides for the development of a plan to address the financing of B-BBEE, including incentive schemes to support the creation of effective Black-owned and managed enterprises.
The Transformation Fund is aimed at complementing existing initiatives to facilitate transformation by mainly capitalising on the Enterprise Supplier Development (ESD) element of the Black Economic Empowerment Codes of Good Practice. This was informed by the2022 study by the Broad-Based Black Economic Empowerment Commission which found that there had been low levels of compliance with ESD spending.This leverages private ESD funding which was otherwise underutilised to transform value chains in those sectors.
The Transformation Fund is a centralised fund for accelerating transformation and economic growth in the South African economy. Government will partner with the private sector to establish the fund, which will be financed through ESD funds,the Equity Equivalent Investment Programme for multinationals, and funding fromthe Competition Commission, as well as other government funding initiatives.
The Transformation Fund aims to ensure the meaningful participation of black people in the formal economy, particularly on the development of micro, small and medium enterprises in rural and township areas, which are often under-serviced in terms of access to finance. In this regard, the DTIC emphasised that the Transformation Fund will provide both financial and non-financial interventions to support transformation in targeted sectors including financial products,market access, and technical support.
It specifically targets labour-absorbing sectors such as renewable energy, mining services, agro-processing, Information and Communication Technology,infrastructure, and manufacturing, as well as services and business process outsourcing, among others.
The committee welcomed the Transformation Fund as a means to contribute towards structural transformation and meaningful participation of black people in the economy. It also welcomed the bridging function that the Transformation Fund will have by offering concessionary funding to businesses that may have had challenges in accessing finance. This will assist businesses to have some form of funding or capital to qualify for DTIC and other government incentives.
However, it raised some matters for the DTIC’s consideration while finalising the concept document. The matters include:
- Ensuring that there is a transparent and effective mechanism to adjudicate and distribute funding;
- Establishing effective governance and accountability structures;
- Involving the private sector to ensure the integration of the black-owned businesses into domestic and global value chains and markets;
- Ensuring that there are built-in monitoring and evaluation mechanisms to measure the success of the fund and its impact on transformation; and
- Establishing a mechanism to coordinate the support offered by the Transformation Fund and various departments and agencies in relation to black-owned businesses and SMMEs.
The Chairperson of the committee, Mr Mzwandile Masina, said: “There is definitely a need for a Transformation Fund that offers funding at concessionary rates,however, the issues raised by the Committee should be given consideration as they would enhance the implementation of the Fund.”
ISSUED BY THE PARLIAMENTARY COMMUNICATION SERVICES ON BEHALF OF THE CHAIRPERSON OF THE PORTFOLIO COMMITTEE ON TRADE, INDUSTRY AND COMPETITION, MR MZWANDILE MASINA.
For media inquiries or interviews with the Chairperson, please contact the committee’s Media Officer: Name: Mr Sibongile Maputi
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Email: smaputi@parliament.gov.za
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