Kebalepile Matlhako | March 12, 2025
One lie that has been reflected forever is that “a wide range of black economic empowerment (B-BBEE) does not work.” I disagree, B-BBEE works. My point is that those who feel that they will benefit from the injustice of exclusion and lose power can continue to spread lies and myths and profit exclusively.
Steve Biko argued that true freedom can be achieved once black people realize that “the most powerful weapon in the hands of the oppressor is the mind of the oppressed.” By challenging the facilities and powers that created an identity of inferiority and helplessness, Black people, and previously marginalized, are freed from the bondage of poverty and the lack of access to the mainstream economy. To me, this suggests that there is no savior for the poor, but they themselves suggest through how they perceive themselves as equal participants in the economy, not just consumers.
There is some weight in the apartheid social engineering debate, but there is ample evidence that some kind of support and a proper policy framework allows more black people to become active players in the mainstream economy and manages to do something. While it takes quite a number to be actively involved, the lenticmind of the oppressed must be decisive in order to move the needle.
Biko's quote reminds us that the most effective way to combat injustice is to help people see the myths and lies used to stay in their place, and to understand the true causes of oppression and the power they have to overcome it.
Recent Announcement by Parkstau, Minister of Trade and Industry Competition (DTIT) aims to establish an R100bn Transformation Fund, which aims to provide support to small, medium, and micro-enterprises (SMMEs) owned by blacks. While some call it a risk that is wise, vague, unconsidered, unrealistic, and potentially fostering corruption and mismanagement, the Institute of Racial Relations calls it unconstitutional and can cause serious harm to the economy. Are these myths and lies that try to keep black people in their own place?
By announcing the direction of this policy, Minister Tau indicated that the fund also reflects the State of Unified Government of the National (GNU) intention statement, which emphasized its efforts to promote relief and comprehensive economic growth. It may be true, but the devil is always in detail, and we await eagerly await the details. GNU's transformative agenda seeks to dismantle systemic barriers to economic participation, ensuring historically underprivileged communities have equal opportunities to thrive in all sectors of society. At the pinnacle of GNU's priorities, rapid, inclusive and sustainable growth remains.
“Through collaboration with the private sector, civil society and other stakeholders, we will create an economy that is inclusive, sustainable and reflects South Africa's diversity,” Tau argued.
In his national speech, the President reflected the purpose of the Change Fund and its role in achieving inclusive and sustainable growth. So, let's ensure that the transformation fund will be introduced as targeted by 2026.
A media release from Minister's spokesman Yamkela Fanisi on January 24, 2025 highlights the purpose of the Transformation Fund, as follows:
1. Promotes economic inclusion: Provide financial and non-financial support to black-owned businesses and ensure meaningful participation in the economy.
2. Fragmentation address: Aggregates resources from existing corporate and supplier development (ESD) obligations and other sources to increase the impact and efficiency of the fund.
3. Promote sector growth: Focusing on shocking sectors, including agriculture, tourism, ICT, manufacturing, and businesses in towns and rural areas.
4. Strengthen access to the market: Provides beneficiaries with technical assistance, pre- and post-investment support, and market access opportunities.
5. Supporting industrialization: In line with South Africa's industrial policy, it stimulates growth in the production sector and undeveloped regions.
These objectives, as they do, are almost similar to the Automotive Industry Transformation Fund (AITF), which is successful despite all the challenges, myths and lies. AITF is a good case study that demonstrates that the right will and best approach, market access approach, and transformation funds work.
If you're wondering, here's where the idea for this Change Fund came from, and the final August 2022 report published by the B-BBEE Committee on “Determining the Effective Implementation of the Enterprise and Supplier Development Fund.” The B-BBEE Committee's accountant in his introduction: “In this regard, the study recommends, among other things, pooling ESD funds into central funds. As part of this, it is possible to create a register or database of vetted black-owned companies that qualify under the ESD element, allowing the funds to be more targeted and impactful than they were overall.”
Political parties and civil society continue to criticize the minister when he announced his policy intentions to form the Change Fund, but for me at least, this topic coincides with GNU's priorities long before Tau became Minister in 2022 and is based on research into the ESD landscape.
Competition Commissions, which award or approve mergers and acquisitions and protect the public from exclusive actions, usually instruct the company as a condition to establish funds aimed at creating a comprehensive and diverse supply chain. These funds have not been effective, but in fact, most people have missed the deadline, but businesses continue to make profits. Some people even complain about their lack of ability to provide a power of attorney that they agree to be conditional to a transaction.
The same challenge is met through equity-equivalent investment programs where most companies awarded B-BBEE ownership points through this mechanism struggle to achieve their own performance goals of generating inclusive growth. We also look at the existence of several ESD funds that provide little value to the beneficiaries, but most of the value is given to their respective fund managers and intermediaries. Concerns are that the beneficiaries have not experienced financial and operational independence.
With R26bn available annually to support black-owned SMMEs, DTIC is undoubtedly reporting that 70% of SMMEs have broken down within the first 24 months. So it makes sense to pool these funds together to create an impact. But we must remain cautious about ensuring this is not another story of failure.
As an Environmental and Social Governance (ESG) and B-BBEE Specialist, we fully support the ESD Transformation Funds approach, avoiding excuses for lack of ability to stop leaks and implement them. This issue knows that we live with the will to create inclusive economic growth and deal with the spiritual slavery of the oppressed. I further urge other stakeholders to continue to retain accountable authority.
As a bee room, we continue to provide guidance, support as needed, and necessary criticism and solutions when necessary, ensuring that marginalized growth becomes an active participant in value creation, and equitably benefit from that reward from value creation.
In this way, we dispel the myths and lies that seek to perpetuate the exclusion of the majority from participating in the country's mainstream economy. After all, when the fund works well, our South African economy grows comprehensively, and our demand for products and services increases, and ultimately benefits all fairly, including those who continue to remain unhappy. This would go far further than achieving the true freedom that Biko mentioned. We look forward to participating in the formation of the ESD Transformation Fund.
