Cyril Ramaphosa promotes new R100 billion BEE fund

President Cyril Ramaphosa promoted the controversial R100 billion black economic empowerment fund during his State of the Nation Address.

The fund made headlines last year after Toby Chance, DA spokesperson on trade, industry, and competition, sounded the alarm about the new fund.

Chance warned that the R100 billion transformation fund risks being a slush fund and is open to abuse by connected politicians.

He likened it to South Africa’s R500 billion coronavirus funding, which was dogged by corruption, fraud, and looting.

“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.

Despite this criticism, Minister of Trade, Industry and Competition Parks Tau is pushing ahead with the initiative.

He said the fund, administered by the National Empowerment Fund (NEF), will issue funding only in line with BBBEE regulations.

Tau said money for the fund would be raised according to the BBBEE codes of good practice and through the Competition Commission’s public interest participation.

“Entities are obliged under the BBBEE codes of good practice to contribute an equivalent of 3% of annual net profit after tax for the development of black suppliers,” Tau said.

“Entities will be required to contribute to the transformation fund for compliance with the enterprise and supplier development element.”

He explained that the BBBEE codes of good practice make provision for multinational entities to comply with ownership elements.

This includes setting aside funds—25% of the value of their South African operations—for transformation purposes.

“Therefore, funds from the equity equivalent investment programme will form part of the transformation fund,” Tau said.

Cyril Ramaphosa shrugs off criticism

The Democratic Alliance condemned Minister Tau’s unilateral policy announcement regarding creating a R100 billion Transformation Fund to exclusively assist black businesses.

“His approach is irresponsible as it completely bypasses the necessary Cabinet discussions and approvals required for such significant policy decisions,” Chance said.

He added that imposing further obligations on the private sector and forcing companies to contribute to this fund or face penalties is uncompetitive and illegal.

“The government cannot create such a fund without first obtaining the approval of Cabinet, especially when it effectively introduces a new tax on the private sector,” he said.

“The government cannot arbitrarily impose taxes or new financial obligations on businesses without proper legislative procedures.”

He added that this fund could easily become a bottomless pit for taxpayers’ money, with little to no oversight or meaningful outcomes.

National Employer Association of South Africa (NEASA) CEO Gerhard Papenfus also criticised the new R100 billion BEE fund.

He accused the government of looking to replace its failed black empowerment policy with the Transformation Fund.

Ramaphosa dismissed this criticism and promoted the fund during his 2025 State of the Nation Address (SoNA) on 6 February.

“We will set up a transformation fund worth R20 billion a year over the next five years to fund black-owned and small enterprises,” he said.