By Alicia Mmashakana
The Democratic Alliance (DA) has criticised the announcement of a R100 billion Transformation Fund aimed at promoting economic transformation through support for black-owned businesses and Small, Medium, and Micro Enterprises (SMMEs).
According to DA spokesperson on Trade, Industry & Competition, Toby Chance, the Trade, Industry, and Competition Minister Parks Tau’s fund bypasses necessary Cabinet discussions and approvals and undermines the Government of National Unity (GNU).
“The DA cannot support such unilateral decisions,” said Chance.
“This policy is a clear violation of the principle of good governance. It is unthinkable that the Minister would announce a policy of this magnitude without ensuring the necessary legal processes are followed. The government cannot arbitrarily impose taxes or new financial obligations on businesses without proper legislative procedures.”
DA’s criticism of the fund centers on Tau’s proposal to enforce additional obligations on the private sector via Broad-Based Black Economic Empowerment (B-BBEE) codes, which compels companies to contribute to the fund or face penalties.
The DA argues that creating such a fund without explicit Cabinet approval constitutes both unfair competition and illegality, likening it to a new tax on businesses.
Tau recently defended the initiative during a recent parliamentary Q&A in the National Assembly, asserting collaboration between the public and private sectors through the NEF SPV.
The minister said the fund aims to improve access to funding for black-owned enterprises and SMMEs and is aligned with NDP Vision 2030 goals to combat unemployment, inequality, and poverty.
Tau also outlined that the fund’s financing will adhere to B-BBEE Codes of Good Practice and mechanisms within the Competition Act, drawing from private-sector sources.
Entities falling under Statement 400 of the B-BBEE Codes must allocate 3% of annual net profit after tax to developing black suppliers, now redirected to the Transformation Fund under the Enterprise and Supplier Development element.
Detractorsof the fund, including the DA, argue that compelling multinational corporations to make cash contributions equivalent to 25% of their local operations’ value if they opt out of ownership provisions under the Equity Equivalent Investment Programme could deter investment amid stringent compliance requirements.
The DA urged Tau to bring the proposal to Cabinet for proper approval, insisting that implementing such a policy without due legislative process undermines the principles of good governance.
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