Ramaphosa backs new R100 billion Transformation Fund that can end BEE 

President Cyril Ramaphosa has thrown his support behind the proposed R100 billion Transformation Fund overseen by the Department of Trade. 

The fund is seen as one of the most significant alterations to South Africa’s Black Economic Empowerment (BEE) framework since the policy was first introduced in 2003.

It is set to introduce a new way for businesses to earn BEE points, improving their chances of doing business with the state and large corporates. 

In a response to a Parliamentary question, Ramaphosa said transformation remains a key pillar of the government’s economic programme. 

“An ‘inclusive economy’ describes an economy in which all South Africans, regardless of race or gender, are able to participate as owners, managers, entrepreneurs and workers,” Ramaphosa said. 

“An inclusive economy is a radical departure from what has existed in this country for decades, and is aligned with the statement of the Freedom Charter that ‘the people shall share in the country’s wealth’.”

The President said the government will continue to use all available policy levers to deconcentrate ownership. 

This includes competition laws, BEE legislation, sector codes, preferential procurement, and the state’s Master Plans. 

“There is both a constitutional and economic imperative to correct the skewed patterns of ownership, control, and participation in the economy,” Ramaphosa said. 

He explained that one of the more recent interventions from the government is the establishment of the Transformation Fund. 

“The fund aims to improve access to funding for majority black-owned and controlled enterprises, and support majority black-owned and controlled enterprises to participate in value chains across key sectors of the economy,” he said.

Trade Minister Parks Tau has explained in more detail how the fund will work and how it will be funded, with it coming in for stiff criticism. 

Tau has said the Transformation Fund will be an independent entity run through partnerships with public- and private-sector stakeholders. 

The fund will partner with financial institutions to develop a digital portal for real-time investment monitoring.

The system will also monitor job creation and impact metrics, supporting data-driven decision-making and transparency.

“The Transformation Fund is structured to reduce over-reliance on credit for black MSMEs by adopting a blended finance approach,” Tau said.

Beginning of BEE’s end

While Ramaphosa hails the Transformation Fund as a means of overhauling the ownership of South Africa’s economy, analysts have pointed out that it might be the beginning of the end for BEE itself. 

This does not mean that transformation as a policy agenda will come to an end or BEE will be eliminated, but how companies comply will fundamentally change. 

The existing BEE framework has proven to be extraordinarily costly for companies to comply with and comes with little commercial benefit. 

This has resulted in declining compliance with BEE regulations, with a recent study from Codera Analytics and XA Global Trade Advisors indicating that 37% of firms are non-compliant. 

The study also noted that 67% of respondents to its survey said they do not have BEE shareholders, indicating that very little has been achieved by the framework. 

BEE itself has also become increasingly associated with cronyism and corruption, as a few rich individuals with political connections appear to be the only beneficiaries. 

The fund has been partly implemented to solve these challenges by making it easier for businesses to comply and for the state to close loopholes that have been abused by individuals. 

However, giving businesses a new way to comply could spell the end of BEE in its current form, Efficient Group chief economist Dawie Roodt said. 

Roodt noted that the government has historically defended BEE very strongly and refused to engage in debates regarding the impact of the policy. 

The state’s newfound willingness to change the policy framework indicates that it does not think BEE has had the desired effect. 

In his 2026 State of the Nation Address, Ramaphosa said the government is undertaking a review to refine, rework, and strengthen its broad-based BEE framework to ensure that it supports greater transformation and inclusive growth. 

“This shows that BEE is probably going to be redefined, and I think this is probably the beginning of the end of BEE as we know it,” Roodt said. 

Roodt explained that the existing BEE framework is likely to be replaced with the new Transformation Fund, with businesses paying into the fund to secure points for their BEE scorecard. 

“This will probably be the end of BEE when this process is followed through to its conclusion,” Roodt said. 

When the fund is established, companies will be able to earn points for their BEE scorecard by contributing to the fund. 

Webber Wentzel’s experts explained that businesses could even score more points by contributing to the fund than by making individual contributions to black-controlled companies. 

The proposal is to increase the total points businesses can score in the Enterprise and Supplier Development element from 46 to 53, including bonus points, if they contribute to the fund.