Government’s new plan for R100 billion BEE fund

South Africa’s government will offer companies new incentives in an initiative to capitalise a fund that will be used to promote Black Economic Empowerment, Business Day reported, citing a Ministry of Trade, Industry and Competition document.

Under the proposal, companies that contribute 3% of their net income to a so-called Transformation Fund will earn double the points currently available for a scorecard that measures businesses’ support for greater economic inclusion.

The increased number of points will improve companies’ access to government and corporate procurement.

The fund will be governed by a board appointed by the minister and supported by a public-private investment committee, the paper said. The revamped proposals are expected to be unveiled next week, it said.

Minister of Trade, Industry and Competition Parks Tau is pushing ahead with the initiative has previously said the fund, administered by the National Empowerment Fund (NEF), will issue funding only in line with BBBEE regulations.

The ANC’s largest partner in the Government of National Unity, the Democratic Alliance, has said it would “not support this madness”.

Toby Chance, the Democratic Alliance’s spokesman on trade, said, “This fund could very easily become a bottomless pit for taxpayers’ money, with little to no oversight or meaningful outcomes.”

“Not only does the DA reject race-based legislation, but BBBEE has proven counterproductive in closing our inequality gap,” Chance said.

He added that the majority of funding is missing the mark in terms of stimulating high-growth enterprises in South Africa. “Instead, we believe in providing resources based on merit and the business’s viability and growth potential,” he said.

“Our country has an abundance of entrepreneurs drawn from diverse communities who just need the opportunity to succeed.”