Staff Writer | March 12, 2025
Minister of Trade, Industry and Competition Parks Tau said the new R100 billion change fund will provide black-owned businesses with access to funding.
He provided details about the Change Fund in response to a parliamentary question from Thokozani Makhosonke Langa.
R100 billion in funds became prominent last year after Toby Chance, a spokesman for trade, industry and competition, issued a warning about the new fund.
The opportunity warns that the R100 billion transformation fund will risk being a slash fund and is open to abuse by connected politicians.
He likened it to South Africa's R500 billion coronavirus funding.
“As well as rejecting race-based laws, the DA has proven to be counterproductive in filling the inequality gaps,” Change said.
He added that most black empowerment funds will not inspire high-growth companies in South Africa.
Another controversial part of the R100 billion transformation fund is how it is funded, given that companies are already overtaxed.
Tau hopes South African companies will pay 3% of their post-tax annual net profit for the new R100 billion transformation fund.
In response to Chance's question, Tau told Congress that funds will be raised in accordance with the Bbbee Good Practice code.
Another source of funding comes through public interest participation in the competition committee.
“The entity is obligated to contribute, under the BBBEE Good Practice Code, to contribute, equivalent to 3% of the post-tax annual net profit for the development of black suppliers,” Tau said.
“Entities must contribute to the Transformation Fund to comply with the corporate and supplier development components.”
He explained that BBBEE's excellent practice code is provided for multinational companies to comply with the ownership element.
This includes putting aside 25% of the value of South Africa's operations for change purposes.
“Therefore, funds from equity-equivalent investment programs form part of the transformation fund,” Tau said.
President Cyril Ramaphosa promoted the controversial Black Economic Empowerment Fund in his national speech.
“We will establish a transformation fund worth R20 billion a year over the next five years, providing funding to black-owned and small businesses,” he said.
Details of the 100 Billion Change Fund
Langa asked Minister Parkstau for a detailed breakdown of the R100 billion transformation fund and how to ensure that money reaches intended beneficiaries.
Tau repliedsaid the fund will be administered through a partnership between the private and public sectors.
He added that the Change Fund has a governance structure consisting of a board of directors and an oversight committee.
The Minister explained that Article 9 (2) of the Constitution places a collective burden on everyone to defend equality and relief.
He said that constitutional business can be provided with legislative driving force through section 2(h) of the BBBEE Act.
This requires the government to “increase the effective economic participation of black-owned and managed businesses.”
He added that it will enhance access to financial and non-financial support, including small, medium, micro-businesses and cooperatives.
“The Transformation Fund is being established to address access to funds from black-owned businesses and SMME,” Tau said.
“This increases the likelihood of constitutional economic participation and income income.”
This is achieved through the aggregation of funds, including contributions to corporate and supplier development and investment programs that are equivalent to stocks.
R500 Million Fund to Support and Support Rural Spaza Shops
It is not the only initiative to support black businesses in South Africa.
On March 3, 2025, SME Development Minister Stella Ndabeni-Abrahams launched the R500 million fund to support rural Spaza Shops.
Ndabeni-Abrahams said the Spaza Shop Support Fund will strengthen Spaza Shops' competitiveness and help them compete with large retailers.
She explained that the fund will provide financial and operational support to township convenience stores.
“The fund will be launched in the next two weeks and will provide an exact date,” she said.
The initiative will be jointly funded by the Small Business Development Authority (R150 million) and the Trade and Industry Competition Authority (R350 million).
“The fund aims to boost economies of scale by linking spaza shops and food processing outlets with purchasing groups for bulk purchases,” she said.
“We will strengthen our business operations through training and support and increase the competitiveness of the overall market.”
She told Congress R500 million had not yet been paid because Spaza Shops had to be registered first.
The registration process ended on February 28, 2025 helped determine the scope and type of support the owner needs.
“This information was essential to designing the right support mechanisms for their needs,” she said.
With the registration process complete, the fund will soon be open for application.
“Disclaimer – the views and opinions expressed in this article are the views of the author and are not necessarily those of the Bee Room.”
