The government is preparing to launch a revamped Transformation Fund as early as next week, rewriting incentives that have shaped corporate behaviour for more than two decades. A trade, industry & competition ministerial briefing pack, seen by Business Day, shows that companies will be able to earn 30 broad-based BEE (BBBEE) points by contributing 3% of net profit after tax to the fund — double the points currently available for the same outlay under traditional enterprise supplier development (ESD) routes. The 30-point reward is large enough for many companies to move several levels on the broad-based BEE scorecard.
For companies in the midrange, a single contribution could lift them into level 3 or higher, improving access to government and corporate procurement without changes to ownership or management. Early unsigned or conditional commitments listed in the briefing pack totalled R13.1bn, led by R10.8bn from Afreximbank and smaller entries of R500m each from the Unemployment Insurance Fund, Industrial Development Corporation and Development Bank of Southern Africa, while Vodacom-Masiv will pump in about R400m. These sums are not far from the fund’s annual mobilisation target of R20bn.
“The fund will be capitalised through the aggregation of resources anchored in BBBEE policy provisions, complemented by contributions from mechanisms such as Competition Commission public-interest commitments and other strategic funding partners,” the document reads. The fund will be in a special purpose vehicle incubated by the National Empowerment Fund, targeting a small set of priority sectors — renewable energy, manufacturing, agro-processing, logistics and digital infrastructure — chosen for their ability to deliver jobs and industrial impact. The fund will offer grants, loans, equity and business development support.
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The document also shows the fund will be governed by a minister-appointed board, supported by a public-private investment committee. The move could simplify compliance and channel more money to black‑owned businesses, offering a fast shortcut to procurement competitiveness without forcing companies to restructure ownership or overhaul management. However, it also concentrates decision‑making in a minister‑appointed board, potentially raising concern that the commercial rigour needed to turn pooled capital into jobs and business will be undermined by directors beholden to ministerial preferences.
The briefing broadly mirrors the same policy objective as reported by Business Day last year, centralising corporate transformation capital and offering a simple compliance route. But it is likely to disappoint cheerleaders of the initial proposal to launch the department of trade, industry & competition into action last year. Under that proposal, unlisted companies would have been offered anopportunity to pay 3%of gross revenue into a South African Revenue Service-collected pool managed by a private fund of funds in exchange for an automatic level 3 recognition. Corporates prefer the option that offers the clearest, cheapest path to procurement advantage and the least compliance friction, one small business owner briefed on the department’s plans said.
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